Page:Stabilizing the dollar, Fisher, 1920.djvu/55

 CHAPTER I

THE FACTS

1. Index Numbers

This book aims to show how prices in general can be controlled.

A great teacher once said to his students: "Divide the study of any social situation into four questions: What is it? Why is it? What of it? What are you going to do about it?" Accordingly I shall take up, in successive chapters, (1) the actual facts to be explained; (2) the chief causes which explain them; (3) the resultant evils which make a remedy desirable; and (4) the remedy.

The present chapter is devoted to the first of these four topics—the facts, as shown by the recorded price movements of history.

The prices of various articles do not usually move together but scatter or disperse like the fragments of a bursting shell. Yet there is always a definite average movement just as there is a definite path of the center of gravity of the shell-fragments.

In order to depict the average movement of prices we must first have some way to measure it. A very simple measure has been devised, called the "Index Number." 1