58
A TREATISE ON MONEY
BE. U
altogether or weights inadequately certain importantobjects of consumption—in particular, personal ser-vices and complex manufactured goods ( e.g . motor-cars). The first omission (though sometimes partlybalanced by the second omission) is a serious sourceof confusion in a community which is technically pro-gressive and increasing in wealth, inasmuch as technicalprogress tends to lower the cost of commodities in termsof services, whilst at the same time the communityspends an increasing proportion of its income onservices as its average wealth increases. In mostcountries the nearest thing to a Consumption Index-Number is the Index-Number of the Cost of Living of the Working Classes . This Index-Number has thesame defect, however, as the wholesale index-number,though in a less degree, particularly if it is extended toapply to other classes in the community, namely thatit under-weights expenditure on personal services incomparison with expenditure on commodities.
Nevertheless, with the growth of statistical material,the resources of an energetic Government departmentought to be equal to the compilation of a reasonablyaccurate index of the purchasing power of moneywithin a few years’ time. Meanwhile we must becontent to do the best we can by combining someof the existing series of secondary index-numbers.
Some valuable pioneer work along these lines hasbeen carried out by Mr. Carl Snyder, the statistician of the Federal Reserve Bank of New York . 1 Hisindex-number, which he calls “ the index of thegeneral price level ”, is arrived at by combining thefour following secondary index-numbers with weightsin proportions as stated :
Wholesale prices . . 2 Cost of living . . 3J
Wages . . . 3J Rent . . .1