20 
THE STATISTICAL VERIFICATION OF 
‘ The fluctuations in the profits of spinning are very 
violent. The deviation of the price from the trend of 
prices is 14-4 per cent. on the average price, but the 
deviation of profits is 154 per cent. or nearly eleven 
times as great. (Standard deviation taken.) Reckoned 
by another method also, it is ten times as great (average 
deviation). It may fairly be said the fluctuations in 
profits are ten times as great as fluctuations in prices.’ 
As regards general profits, I was able to come to such 
conclusions as the following : 
Speaking for the results of trade as a whole, the 
statistics of the Bankers’ Clearing House and of the 
railway receipts (or tonnage) have afforded a reliable 
test as to the direction of the movements in profits, 
and the movement of foreign trade is also a fair but 
less important criterion. 
‘ The fluctuation in profits has generally been rather 
less, in magnitude or range than the fluctuation in 
statistics of ‘‘ turnover ”’, such as banking or foreign 
trade statistics, which reflect both quantitiesand prices, 
and it may be taken roughly at two-thirds to three- 
fourths of such short period changes in trade returns. 
¢ The influence of a change in price level on profits 
as a whole is far less than is frequently supposed by 
those who base their views upon observations of the 
striking effect of price changes in particular industries. 
‘In times of rising prices, increases in profits have 
been made over and above the amount that would 
arise upon the increased output that such prices induce, 
but the additional profit is not usually much greater in 
proportion than the rise in price, if the period taken is 
not less than a year. There is no evidence as to the 
effect of such changes measured over shorter periods 
than a year. 
¢ Although the increased quantities evoked by 
increased prices have followed quickly enough to 
keep profits within such limits, the check has not 
been permanent, and continually renewed stimulus 
by the raising of the price level has resulted in increases 
of profits much greater than could have followed the