Constructing the nineteenth-century cost of living deflator (1800-1913)
Working document project on the reconstruction of the national accounts of the Netherlands
Author: Arthur van Riel
A. Price series
Although the procedures followed in the (re-)construction of the nineteenth-century consumer price index are largely similar to those delineated with regard to the earlier periods, the differences that do exist should not go unmentioned. The main contrasts concern the robustness and fragmentation of the price data caused by a more extensive geographical coverage, and the information on consumption patterns underlying the weighting schedules that have been applied.
To start with the former, although for most of the century the sources used are similar to those specified by the second volume of Posthumus' price history (in the case of the Amsterdam Burgerweeshuis and the Leiden Heilige Geest orphanage the sources are identical), the geographical coverage of the records used is more elaborate. Posthumus' work itself, in fact, contains only a limited number of nineteenth-century price series (which additionally rapidly diminishes as time wears on). Consequently, a shortage of accessible materials on nineteenth-century prices in the presence of a more or less elaborate documentation of earlier price movements, has -thanks to Posthumus' work- long been a peculiar characteristic of Dutch economic history. However, as a result of the efforts made within the context of the research project aimed at the reconstruction of the Dutch national accounts after 1800 -in which three of us participate-, price series have been retrieved from institutional records kept by the various provincial or municipal record offices in order to reconstruct a representative CPI series. From the original series, the relevant 'West-Netherlands' data were isolated and, using these, an adapted deflator could be reassembled. A full survey of the individual series is given in van Riel, Postponed Conformity (to be published), part III (save for series already published, such as those gathered by Posthumus and the C.B.S.). Observing the classification of products used there, the array of series from which the ultimate deflator was composed amounted to the following numbers:
Bread prices: 60 (mainly assize data (up until 1854) and bread factory prices) Foodstuffs etc.: 375 (of these 239 institutional series, 136 retail) Clothing and textiles: 146 (mainly institutions, textiles are partly wholesale prices) Shoes and leather: 11 (institutional and wholesale prices, tender contracts) Additional: tea, tobacco: 9 (wholesale import prices) dairy: 15 (market prices) potatoes: 4 (average provincial market prices) eggs: 1 (market prices)
An important thing to note is that, in contrast with the intertemporal stability of the institutional records used for earlier periods, few of the available nineteenth-century sources yielded data series that cover the full extent of that era. Consequently, not only did the enlarged coverage of the data exacerbate the need for a cross-sectional averaging of price movements, but the restricted length of the series also necessitated a fair amount of splicing. In the case of relatively homogeneous goods (such as rye bread or potatoes -some might even disagree with the latter assumption, but the market reports simply state overall average prices) this does not present any great difficulty. In fact, in such cases average provincial price series had already been calculated and averaging their indexed values was straightforward. However, especially in cases like textiles and shoes, where qualities (or other specifications such as width or size) differ greatly between sources, it would have been unwarranted to follow a similar procedure. Moreover, in several cases -again textiles form the most illustrative example- each source specified a variety of different products. The solution in the last case has been to weigh each homogeneous price series into a combined index (given identical periods of observation). Usually, this was done by computing an unweighted average of all indexed price series, hence alotting equal weigths to all products bought by a certain institution (in the case of missing values a series simply drops out). In the case of clothing it was assumed -on the basis of a stylized impression from various institutional records that stated quantities issued- that double sets of underwear were bought to match a single combination of upperwear.1 Chronological links between indices thus obtained were made by running OLS regressions for overlapping values, with the series to be spliced onto the existing one taken as the regressor (and including a constant). Finally, the resultant fitted values on the one hand, and the series used as the dependent variable on the other were averaged, alotting a weighting factor of one to the new, fitted series, and a factor equal to the total number of composing indices to the 'old' series. In the case of less than five overlapping observations, the new series was spliced onto the earliest common observation.2 The ultimate result of these procedures was a collection of indices for each product as specified by the budget surveys to be discussed below (cf. annex table.), supplemented with the subdivision of items also shown in the case of overly indiscriminate headings (e.g. 'fuel', 'vegetables', 'groceries' etc.).
Some final remarks on the price series used are due. First, it is only as of 1893 that the institutional price series on foodstuffs, soap, soda, and combustible oils could be replaced by retail prices. Second, the data on textile prices could be not be confined to materials on the West-Netherlands. Although several series were retraced for Leiden and Amsterdam, these do not cover the entire period. Consequently -and since the most elaborate set of institutional price series on textiles is that for the combined protestant and catholic orphanages of Nijmegen-, the original textile series used in the national CPI series has been used.3 Finally, similar to the previous point, egg prices used are market prices for the eastern province of Overijssel as reported in the annual reports drawn up by the Provincial Executive.
B. Expenditure patterns
The weighting schedules used in the construction of the cost of living deflator derive from a collection of scattered nineteenth-century budget data that was gathered by van Riel (cf. Postponed Conformity, ch 6). Within this differentiated data set, three more systematic, chronologically distinct inquiries can be identified, and it is around these three that the remaining budgets were grouped (cf. table below). As before, from the full dataset those observations that pertained to the West-Netherlands provinces were selected. In most cases the budget studies retraced concerned urban working-class families that differed not only in size and composition, but also in their participation behavior and occupations. As a result of the largely unsystematic nature of the inquiries, the number and the nature of the expenditure categories distinguished varies between budgets (most featured as documentation to articles published by platforms like the Sociaal Weekblad associated with the rising social-democratic movement; the final 1911-12 observations are, in fact, the result of an inquiry instigated by members of the SDAP -one of whom was N.W. Posthumus). In cases where part of the budgets proved more elaborate than others this problem was solved by first averaging the expenditure shares of main categories as distinguished by all budgets, after which these percentages were distributed across various products with the help of the lesser number of records that allowed for such a distinction to be made.4 It should be observed that the total number of budgets available does not allow for robust conclusions on shifts in consumption patterns with respect to all expenditure categories distinguished (especially the changes in fuel and housing appear strange). However, the timing and extent of the main changes in this respect stand out clearly, and largely exacerbate the results of earlier research on the structure of consumption by Horlings and Smits on the basis of macroeconomic evidence.5 Downward shifts such as those in bread, potatoes and foodstuffs generally, and upward changes in the consumption of meat and dairy products point to obvious Engel effects triggered by the expanding paypackets of the post-1860 period. In fact, when fitted into a standard double-log income elasticity estimation procedure, the three budget clusters not only come up with coefficients that are of the appropriate magnitudes, but robustly suggest the presence of adaptive preferences over the full range of the three timespans considered (estimation through OLS, control runs -after covariance testing- by means of GLS).6 This is a remarkable result in view of very similar evidence recently presented for Britain by Clark, Huberman, and Lindert, and seems to point to a general (late-) nineteenth century development phenomenon (in fact, as an earlier paper by Chaudri and Timmer, and preliminary remarks by Simon Kuznets himself suggest, we may want to add effects like this to the standard characteristics of growth transition processes).7 Finally, subdivisions of expenditure categories that could not be carried out on the basis of the budget inquiries but which needed to be made in order to match expenditure categories to the available price series ('groceries' or 'vegetables', for instance, needed further specification), were undertaken on the basis of institutional purchase records and excise returns linked to average prices, to obtain constant, stylized expenditure proportions (a somewhat rough and ready procedure, but in the absense of more representative evidence just about the only available solution).
All provinces: Tijdschrift van het Centraal Bureau voor de Statistiek (1902-1906); Maandschrift van het Centraal Bureau voor de Statistiek (1906-1914, half-yearly surveys of rye- and wheaten bread prices for all provinces by major cities, computed provincial averages for 1891-1913); De Economist (1884), 581-7, (1869), 919, (1874), 437-9 (various contemporary surveys of breadprices -related to the emergence of bread factories, 1862-1884).
Utrecht: G.A. Utrecht, Archief van de Verenigde Gast- en Godshuizen, 66 (prices for various sorts of wheaten bread, 1865-1912).
Zeeland: Provinciaal Blad van Zeeland (1830-1855, rye- and wheaten bread prices, 1830-1855); R.A. Zeeland, Archief van de Verenigde Gast- en Godshuizen, 214 (wheaten bread prices, 1875-1891); provincial annual reports: Verslag van den Toestand der Provincie Zeeland door Gedeputeerde Staten uitgebragt aan de Provinciale Staten (1856-1876, wheaten bread prices, 1870-1874).
North-Holland: Muskee, De Evolutie (1984), 11 (rye- and wheaten bread prices for Amsterdam, 1816-1856); Jaarcijfers voor het Koninkrijk der Nederlanden (1881-1913, factory prices for rye- and wheaten bread, Amsterdam, 1858-1905; rye- and wheaten bread prices paid by the 'Meerenberg' mental hospital, 1851-1913, and the Leiden and Hoorn state prisons, 1868-1913); Statistische Mededelingen uitgegeven door het Bureau van Statistiek etc. (1911), 8-9 (bread factory prices, Amsterdam, 1870-1909).
South-Holland: Uittreksels uit de Berigten van Leden Correspondenten der Nederlandsche Huishoudelijke Maatschappij (Leiden market prices for rye- and wheaten bread, 1824-1850); G.A. Leiden, Nieuw Archief der Gemeente Leiden 1816-1929, 2108 (continued data for 1849-1855); Verslag van den Toestand der Gemeente Leiden (1856-1860, ibid. data for 1856-1860); Bool, Statistiek der Gemeente Leiden (1884), augmented by the updated version of the same work by Fokker (1915, prices for rye- and wheaten bread at the Leiden bread factory 1867-1913); G.A. Leiden, Archief Rooms-Katholiek Armbestuur, 90 (rye- and coarse wheaten bread prices computed from monthly bakery invoices, 1860-1867).
Other foodstuffs, combustibles, soap:
Utrecht: G.A. Utrecht, Archief der Verenigde Gods- en Gasthuizen, 66 (annual accounts, 1865-1907); Posthumus, Nederlandse Prijsgeschiedenis II (1964), tables 91-139 (Bartolomei Hospital tender prices 1800-1913); G.A. Utrecht, Archief Gereformeerd Burgerweeshuis, 819 (tender prices, 1842-1894).
Amsterdam: G.A. Amsterdam, Archief van de Gasthuizen te Amsterdam (PA 342), 1304 (annual consumption surveys, 1813-1854); G.A. Amsterdam, Archief der Evangelisch-Lutherse Gemeente (PA 200), 629-30 (purchase records 1874-1881); Statistische Mededelingen uitgegeven door het Bureau van Statistiek (1911, various local institutional price series, 1881-1911).
Leiden: G.A. Leiden, Archief van het Heilige Geest- of Arme Wees- en Kinderhuis, 2635-89, 2777-2833 (annual accounts, 1800-1876), 3624 (tender prices, 1873-1913); G.A. Leiden, Archief der Nederduits Hervormde Diakonie, E 67-8 (surveys of purchases, 1842-1863), E 61 (tender prices, 1871-1908); G.A. Leiden, Archief van de Verenigde Gast- en Godshuizen, 1503.
Middelburg: R.A. Zeeland, Archief van de Commission d'Hospices en de Verenigde Gods- en Gasthuizen, 13, 202-203 (annual contracts, 1813-1913).
Various locations: Prices paid by the 'Meerenberg' mental hospital (Bloemendaal, North-Holland) and the Hoorn (North-Holland) and Leiden (South-Holland) state prisons: Jaarcijfers voor het Koninkrijk der Nederlanden (1881-1913, prisons: 1868-1913, 'Meerenberg': 1851-1913).
Amsterdam, Haarlem, The Hague, Utrecht, Rotterdam (retail prices paid at shops of the consumer cooperative society 'Eigen Hulp', 1893-1913): Tijdschrift van het Centraal Bureau voor de Statistiek (1891-1904); Maandschrift van het Centraal Bureau voor de Statistiek (1905-1914); Jaarcijfers voor het Koninkrijk der Nederlanden (1894-1913).
Clothing and textiles:
G.A. Nijmegen, Archief der Beide Weeshuizen, 832-7 (annual tender prices, 1818-1906); G.A. Zwolle, Archief Gemengd Armbestuur der Nederduits Hervormde Gemeente (IA 034), 356, 362; G.A. Zwolle, Archief van de Commissie voor het Oude Mannen- en Vrouwenhuis der Nederduits Hervormde Gemeente 1874-1973 (IA 033), 72, 74-5, 77 (all Zwolle: institutional prices, 1852-1913); G.A. Amsterdam, Archief Burgerweeshuis, 73-4 (contracts, 1816-1879); G.A. Leiden, Archief van de Nederduits Hervormde Diakonie, C 9, E 61, E 64 (surveys of clothing and textiles issued and their value, 1843-1886); G.A. Leiden, Archief der Verenigde Gast- en Godshuizen, 1501 (ibid., 1835-1852); C.B.S. (1922) "Prijzen in de Jaren voor 1921", supplement to Prijzen en Kosten van Levensonderhoud no. 3 (annual wholesale prices, 1901-1913); De Economist (1868), 922-33, (1870), 959-60 (price surveys of army clothing, 1861-1870); R.A. Drenthe, Archief van de Maatschappij van Weldadigheid 1818-1970, 1602, 1606 (annual sales of bed- and underwear to the N.H.M. and the ministry of colonies, 1838-1859); R.A. Drenthe, Archief van de Maatschappij van Weldadigheid, 1818-1970, 1073-93 (prices of clothing in stock, 1821-1858); A.R.A., Archief Binnenlandse Zaken, afd. Armenzorg (2.04.01), 950, 1036, 1131, 1258 (ibid., 1848-1855, identical surveys related to the Veenhuizen workcolony, transscripts submitted to the central authorities); G.A. Nijmegen, Archief van het Oudburgeren Gasthuis, 424-433 (institutional prices, 1839-1849); R.A. Noord-Holland, Archief Rijksmarinewerf, 3647-57 (stockprices of textiles and navy clothing).
De Economist (1868), 931-2 (prices paid for army boots and leather, 1861-1870); G.A. Nijmegen, Archief der Beide Weeshuizen, 837 (shoe prices for male and female orphans, 1899-1905); Verslag van den Toestand der Gemeente Leiden (1888-1906, tender prices for bridgemaster's shoes, 1888-1906); R.A. Drenthe, Archief van de Rijkswerkinrichtingen te Veenhuizen en Ommeschans 1860-1963, 141-151 (annual tender prices for sole- and upper leather 1831-1902); C.B.S. (1922) "Prijzen in de Jaren voor 1921", supplement to Prijzen en Kosten van Levensonderhoud no. 3 (annual wholesale prices for various sorts of shoe-leather, 1901-1913); leather prices for remaining years: Posthumus, Nederlandse Prijsgeschiedenis (1943, 1964) and R.A. Rotterdam, Archief Mees en Moens, 18-21 (price currents, 1825-1894).
Tea and tobacco: series used in the case of missing institutional or retail data
Price currents Kolff en van Binsbergen, (contained in C.B.S. library, 1869-1913); R.A. Rotterdam, Archief Mees en Moens, 18-21 (price currents, 1825-1894); C.B.S. (1922) "Prijzen in de Jaren voor 1921", supplement to Prijzen en Kosten van Levensonderhoud, no. 3.
Potatoes: series derived from average provincial market prices based on the following sources:
G.A. Utrecht, Stadsarchief IV, 676, 1240-44; R.A. Utrecht, Archief van de Commissaris van het Kwartier Utrecht 1813-1816, 312; Verslag van den Toestand der Gemeente Utrecht (1851-1913); Posthumus, Nederlands Prijsgeschiedenis II (1964) 416-23; Muskee, De Evolutie (1984); provincial annual reports for North Holland: Verslag van Gedeputeerde Staten der Provincie Noord-Holland aan de Provinciale Staten, Verslag van den Toestand der Provincie Noord-Holland gedaan aan de Provinciale Staten van dat Gewest door de Gedeputeerde Staten (1851-1876); Bool, Statistiek der Gemeente Leiden (1884); Verslag van den Toestand der Gemeente Leiden (market reports, 1856-1913); provincial annual reports for South Holland: Verslag gedaan door de Gedeputeerde Staten aan Provinciale Staten van Zuid-Holland (1847-1850); Uittreksels uit de Berigten van Leden Correspondenten der Nederlandsche Huishoudelijke Maatschappij (1856-1860); G.A. Leiden, Nieuw Archief der Gemeente Leiden 1816-1851, 2108; R.A. Zuid-Holland, Archief Gewestelijke Besturen 1807-1815, 565; G.A. Leiden, Stadsarchief van Leiden 1574-1816, 2539, 2552, 2555-56, 2562; Pot, Arm Leiden, 310; Provinciaal Blad van Zeeland (1830-1856); provincial annual reports for Zeeland: Verslag van Gedeputeerde Staten aan de Staten der Provincie Zeeland, Verslag van den Toestand der Provincie Zeeland door Gedeputeerde Staten uitgebragt aan de Provinciale Staten (1856-1876); R.A. Zeeland, Prefectuur Archief 1810-1814, 987, 1116; R.A. Zeeland, Archief Provinciaal Bestuur Zeeland 1813-1850, 282-283, 311, 313-317, 350, 356-360; A.R.A. Archief Binnenlandse Zaken, Binnenlands Bestuur B, 1814-1831, 1365; Archives Nationales, Paris, F11 Subsistences, 839, 840, 842, 895; A.R.A. Archief Binnenlandse Zaken 1795-1813, 822, 981.
Butter and cheese: whenever necessary the institutional price series were combined with average market prices taken from the following sources (observing different qualities of butter and cheese):
G.A. Utrecht, Stadsarchief IV, 676, 1240-44; Verslag van den Toestand der Gemeente Utrecht (1851-1913); Verslag van den Toestand der Provincie Noord-Holland gedaan aan de Provinciale Staten van dat Gewest door de Gedeputeerde Staten, Verslag van Gedeputeerde Staten der Provincie Noord-Holland aan de Provinciale Staten (1851-1873); Bool, Statistiek der Gemeente Leiden (1884); Verslag van den Toestand der Gemeente Leiden (1856-1913); Uittreksels uit de Berigten van Leden Correspondenten der Nederlandsche Huishoudelijke Maatschappij; G.A. Leiden, Nieuw Archief der Gemeente Leiden 1816-1851, 2108; R.A. Zeeland, Prefectuur Archief 1810-1814, 983; Verslag van Gedeputeerde Staten aan de Staten der Provincie Zeeland, Verslag van den Toestand der Provincie Zeeland door Gedeputeerde Staten uitgebragt aan de Provinciale Staten (1856-1876); Provinciaal Blad van Zeeland (1830-1855, monthly market reports); A.R.A., Archief Binnenlandse Zaken, Binnenlands Bestuur B, 1814-1831, 1365.
Overijssel market prices derived from the provincial annual reports: Verslag van den Gouverneur en de Gedeputeerde Staten aan de Staten der Provincie Overijssel, Verslag van de Gedeputeerde Staten aan de Staten der Provincie Overijssel omtrent den Toestand dier Provincie (1835-1902).
Annex: table 'West Netherlands' expenditure patterns, combined budget inquiries 1853-1912
1853-1862 1886-1897 1911-1912 Bread Wheaten 9.5 14.0 - Bread Rye 12.6 0.9 - ----- ------ ------ Tot. Bread 22.1 14.9 11.4 Milk 1.9 3.7 5.3 Butter 3.8 4.1 3.6 Eggs 0.0 0.3 0.6 Cheese 0.2 0.9 1.4 ------ ------ ------ Dairy products 5.9 9.0 10.9 Sugar 1.7 2.7 2.8 Grocery 6.7 3.1 3.4 Coffee 2.0 3.0 1.6 Tea 0.4 0.7 0.9 ------ ------ ------ 10.8 9.5 8.7 Potatoes 11.8 6.8 3.8 Vegetables 5.0 3.0 4.4 Fruit 0.0 0.0 0.6 ------ ------ ------ Veg. products 16.8 9.8 8.8 Meat 1.6 3.6 4.6 Fat 2.8 3.7 3.3 Fish 0.8 0.4 0.7 ------ ------ ------ Animal products 5.2 7.7 8.6 ------ ------ ------ Total Foodstuffs 60.8 50.9 48.4 Textiles/sagathy 12.4 8.4 8.5 Shoes 3.0 3.2 3.4 ------ ------ ------ All clothing etc. 15.4 11.6 11.9 Fuel 5.5 4.8 1.9 Light 3.4 3.1 3.9 Soap & Wash etc 3.5 1.1 1.9 Rent 11.4 17.4 14.9 Tobacco - 1.6 1.2 Beer - - 0.3 Liquor - - 0.1 ------ ------ ------ Alcoholic beverages - 0.7 0.3 Contributions etc. - 2.4 6.9 Taxes - - 1.1 Insurance incl. savings - 3.1 - ------ ------ ------ Total Miscellaneous - 8.8 15.2 ------ ------ ------ 100.0 100.00 100.00 N 14 26 48
Sources: computations on budgets derived from the following sources: 1853-62: Tijdschrift voor Staathuishoudkunde en Statistiek (1856, 1853); De Nederlandsche Industrieel, no. 23 Aug. (1862); 1886-97: Bijdragen van het Statistisch Instituut (1886, 1891); Sociaal Weekblad (1889, 1890); Brooshooft, Officiële en Feitelijke Waarheid (1897); 1911-12: Arbeidersbudgets, Jaarbudgets van zeventig arbeidersgezinnen in Nederland, SDAP studieclub rapport 69 (1912).
1. This procedure was, for instance, used in the case of the clothing prices that are contained in G.A. Amsterdam, Archief Burgerweeshuis, 73-4; and G.A. Leiden, Archief van de Nederduits Hervormde Diakonie, C 9, E 61, E 64. [back to text]
2. Cases in which such procedures had to be implemented are, for instance, the linking of time-series for shoes issued at the Veenhuizen penal institutions to army boots (and these in turn to bridgemasters' shoes), and before this -in the absense of price series for shoes- to various sorts of leather. [back to text]
3. G.A. Nijmegen, Archief der Beide Weeshuizen, 832-7. [back to text]
4. Note that the heterogeneity bias introduced by the absence of some categories in each of the three budget clusters cannot be solved except in an arbitrary manner. As annex table explains, only in the case of alcoholic beverages and tobacco did we apply such a procedure. Note that no price series could be reconstructed for the increasingly large 'miscellaneous' category (consisting largely of insurances, contributions etc.). Its costs were assumed to have moved with the weighted average of the remainder of the budget (in other words, weights for products for which prices were retraced were computed over total expenditures minus the 'miscellaneous' share). [back to text]
5. Cf. Horlings and Smits, Private Consumer Expenditure, (1996). [back to text]
6. Consecutive values found for, for instance, bread and all foodstuffs were 0.53, 0.54 and 0.35, and 0.83, 0.81 and 0.68 respectively (van Riel, Postponed Conformity, ch. 6). [back to text]
7. Cf. Clark, Huberman, Lindert, A British Food Puzzle (1995); Chaudri and Timmer, The Impact (1986); Kuznets, The Structure of Consumption (1962). [back to text]