The Yakima herald. [volume] (North Yakima, W.T. [Wash.]) 1889-1914, 1912-08-21

THE
cost of living and there has been no
opportunity to raise the standard of
living along with the supposed in
creased efficiency which comes with
years of experience.
The Capital Using Class
But suppose we take the class
which uses it's money actively in bust
ness and industry This is by far the
most important class for the reason
that they are in the first place the
most important class for the reason
that they are in the first place the
most numerous, outside of the farm
ers, and second i. is upon the activ-
ties of this class that we have been
chiefly dependent for the tremendous
progress that has taken place in the
Industries during the last 100 years.
The chief operation of business men
and the managers of industry con-
sist in the investment of a certain
amount of capital in machinery or
equipment upon which interest must
be earned and the expenditure of an
other amount in raw materials or
goods which are to be turned into
manufactured products and sold at
some future time at an advance to
cover cost of production, interest,
sinking fund and profits. With this
class the problem is not simply an
economic one but is partly psycholog-
ical. II business man sees profits
ahead he becomes optimistic and
tends to increase his activities. IT
there is hidden tendency which
seems to work for the business it
gives an added stimulous If, for in
stance, capital can be had for per
cent and there is an annual rise IN
prices during given year of per
cent the business will be able to take
advantage of this rise and to make
enough above ordinary profits to take
care Of interest on capital, thus vir-
tually giving industry the benefit Of
free capital. 1t is true that may
have to pay per cent increase for
raw material or new stock of goods,
but that does not Interfere with the
fact that I have made a clear Z per
cent on last years business which
would have not been made had there
been no rise in prices. Part of this
profit is absorbed by increased ex-
pense, it is true, but stimulous is
given to enterprise just the same.
Effect on All Lines of Business
The effect of this sort of condition
is to stimulate business of all kinds.
When prices are going up we are in
an era of prosperity and general OPP
timism Real estate booms, The
g h&% ,rinn
making good and banks loan money
freely. Easy credit adds stimulous
and prosperity reigns--that is IT
seems to. Part of this prosperity is
real and part is imagined. That part
of the prosperity which is real is the
part that Is due to what increased
activity there may be. The rest Is I'M
real and the moment prices tend to
some sort of stability hundreds of
men discover that they are on pre-
carious footing They thought they
were making money, but were deceiv-
ed by the fact that the money, in
terms of which they counted their
wealth, was worth less and less each
year. Panics follow when prices be-
gin to fall. ,s
money that is falling in value is that
tious values take the place of real
one. 1t fosters transportation and
destroys stability. Particularly does
speculation in land tend to add to the
general upward movement of prices
When values are rising people lose
their heads. Spectators, with conn
dence born of few successes, enter
the field and booms appear in all
quarters. Nothing has been more
characteristic of the present period
than land booms Some have burst
early, as the Seattle boom. Some
have fingered long. as our own. The
result of these speculative flurries is
that many people buy at prices be-
yond productive possibilities and in
order to make good must have more
for their products. This leads to
more or less successful attempts
through organization and otherwise
to boost prices of commodities. The
most disastrous effect, however, is
found in the fact that when land is
high people move off it, or refuse to
occupy it, with the result that pro-
duction falls below the normal and
prices go up by sheer force. This is
one of the reasons why, in addition to
the average rise in prices, food stuffs
have gone up in many cases 100 per
cent during the period under consid-
Grafton.
Thus we have a chain of causes
and effects which all lead in the same
direction and traceable to the first
cause, that of cheapness of money.
w w WORTHTNGTON