The Wisconsin tobacco reporter. (Edgerton, Wis.) 1877-1950, 1916-11-17

In the present mad rush of price
advances people at large do not seem
to take into consideration the under
lying economic principle which in itself
is warning against the many Illusions
of unchecked prosperity. For the
steady advance does not mean of itself
the amassing of wealth. The standard
measure of value is money but the
gaining of wealth depends on the pur-
chasing power of money. With steady
appreciation in value of commodities,
the purchasing power of money under
present conditions is being proportion
ately deprecated. The dollar nova
days does not buy as much as dollar
did two years or year ago. Conse-
quently, when the price Of cigar or a
package of cigarettes is raised, the
manufacturer and seller do not get it's
full equivalent, in moneys purchasing
power, because the advance in price
has been discounted by previouse ad-
vance in the cost of materials enter
ing into the commodity. If purchaser
gets only five cigars for quarter now
when he used to get six, it means SIM
ply that the value of the quarter has
deprecated to the extent of the elimi-
nation of the extra cigar. Economical
ly speaking, the purchasing power of
money falls with the rise in value of
commodities. Not that the dollar is
worth less than one hundred cents, but
the one hundred cents have lost their
power of their former equivalent in the
commodity for which they are bartered.
If price advances are, therefore, view
ed in the light of this economic policy
they are likely to canse less resent
ment, or rather, they would more
quickly produce basis Of adjustment
between manufacturer and labor, and
buyer and seller. Moreover, the ques-
tion may be very properly asked wheth-
er if in the general price advance of
all commodities the dollar has lost the
purchasing power of its equivalent in
normal times, why then should the dol
lar or five or ten cents buy In the to-
bacco trade the same quality and guam
tity it bought when its purchasing
power more closely approximaUed the
full value of the commodity? AS a
dollar cannot buy nowadays as much
tobacco as it did year ago, as it can
not provide the factories with its for
mer equivalent in the purchase of pack
ages, or any other supplies, how can it
be expected that it should buy the full
equivalent in finished cigars and other
tobacco products? In order to cover
the full present value of cigar or a
package of cigarettes or tobacco, the
purchasing power of the money must
be advanced in equal proportion. On
the other hand, the very increase of
the volume of money which is gener-
ally assumed to be prosperity causes
money to cheaper and is responsible
for the upward drive Of the value of
commodities. Our country has for the
past two years been flooded with fabu-
Ious sums of money, which naturally
seek distribution in all arteries of trade
and commerce. It's aff1uity, however,
depreciates its value just as an aff1uity
of commodities depreciates their value.
If we produce larger tobacco crops
than they can find consumption for,
their prices are bound to drop. 1t is
the crops then that seek the level OF
the money and naturally the value of
the dollar stiffens. The reverse, then,
proves true also. in the present case.
u. 5. Tahacco Journal