Arizona republican., 1917-10-08


 struction from war. labor unions, short hours of labor trusts. the tariff. cold storage, longer hauls on railroads. mar keting by telephone, the free delivery system, the individual package. the en- forcement of sanitary laws, the tuber- culin testing of catte, the destruction of tainted meat, sanitary milk, adver- using, unscientific management, the elimination of renovated butter and of 'rotS and spots in eggs, food adulter- ation, extravaganza, concentration of populations in cities. impoverishment of the soil. the displacement of the neighborhood farmer, the fact that farmers wives no longer compete in butter making or poultry raising, drought, and of late, hoardlng of house. wives. While some of these alleged causes are important factors in raising particular prices. not single one of them has much to do with raising the general level of prices. s-I +
 Money dominates uru
 There is a fundamental common cause underlying the general upheaval and that cause is money. Few realize that the quantity of money has any thing to do with the price of com modity, still less that the quantity of money has anything to do with the general level of prices. Since. Ws talk always in terms of money and live in money atmosphere, as 1t were. we become so unconscious of it ---s~e- do of the air we breath
 Even the war, which is at bottom the chief reason. for the high cost of living. has. the facts show, raised the price level far more through monetary inflation than through causing a scar city of goods. Throughout history and even during war, the present one being no exception. changes of the price level have, in general, corresponded to the changes in the monetary circulation and it's credit substitutes.
 Whenever there have been great out- pourings from mines following dis coveries of the precious metals used for money, as during the sixteenth century after great stores of precious metals have been found in the new world. after the Calirorn.an and Aus tralian gold mining of the fifties and after the Alaskan and Cripple Creek mining Of the late nineties. We have found rapidly rising prices.
 Prices and Paper Money
 Again, whenever there has been ar tificial monetary inflatiorf through is- sue of paper money, such as occurred during the French revolution, during our own early colonial history, during the American revolution, during the Napoleonic warSin aEnglan during the American civil war and during the present war in Europe. there has been a rise of prices in such paper standard countries.
 i''On the other hand, while.such money is being withdrawn, as during the sev- enties in the United States, prices have fallen. '-
 Then there is remarkable family resemblance between the price move ments of all countries having the same monetary standard The price move ments in all gold standard countries are strikingly similar, such as in tht United States and England since 1S2l excepting 1862-7S- when United States was not on gold basis. So too ths price movements in silver countries show a strong likeness, as India anc China from 1873 to 1893.
 Again countries with different mon etary standards show corresponding di- lvergences in their price movements Thus during our sreenback days, lS62' 7s, the price movements in this countr, were unlike the movements of foreigr prices. &EE s..
 We find also great contrast be- tween gold and silver countries Speaking roughly we may say that be tween 1873 and 1896 the price level 1T gold countries fell 25 per cent and 1T silver countries rose 30 per cent. 3.'5
 Close Agreement
 ''Finallyowe find that when there ar' violent changes in the quantity of mon ey there are corresponding changes II the price level The present war sup plies such a case. The quantity O money in circulation month by monti and the monthly index number of price! run strikingly parallel. It was in Aug ust 1915 that the quantity of money 1T the United States began it's rapid in crease. One mnoth later prices began to shoot upward keeping almost exac pace with the quantity of money. II February 1916 money suddenly stopped increasing and two and a half month. later prices stopped likewise. Similar striking correspondences ,fave eontir ued to occur ever since, with an aver age lag between the money -caase ant the price-effect of about onesand three quarters months;
 But it is not only money as we com nonly think of it which affects, th' price level In order fully to explain price movements we must take into ac count credit currency, the so-eAlle, money I have in the bank" which VI pay out in checks, and which chanee relatively to money We must furtne take into account the fapidity of cir culation of both true money and de posit currency. and finally. We mus take into account tho amount Of trade We find that the price level changes il the same direction with money and de posit currency and their rapidity O circulation, and in the opposite direc ton from the volume of trade.
 For 1916 the quantity of money Ii circulation in the United States, out