The Alaska daily empire., 1918-03-30
WHAT CAUSES HIGH RICES

In it's last circular the Guarantee Trust Compal ries to give some of the reasons the increasil ost of living from which the following extracts a aken
 One of the most valuable results of this war promises to be general and better un- derstandng of the fundamentals of economies and finance The confusion, for instance, which seems to exist in many quarters as to the caus- es underlying the precipitate rise in commodity prices and particularly that which erroneously attributes the present price level solely to the expansion of banking credit, will probably be dispeled In the great laboratory which the worldwide war is affording for the testing of practically all such theories it will be estab- lished conclusivey that there many factors which contribute to the advance of prices, not the least of which is the weknown law of supply and demand.
 Price movements in fact up in them selves the results of the bewilderng and i'm mensely complex interplay of all economic fac tors The attempt to analyze the causes of price movements involves study of all the various complex phenomena of our economic life. Since price changes result from many and diverse economic factors it has come to be felt by many that any attempt to explain such changes solely from the standpoint of the increase decrease in the circulating medium leaves out of sderation many other important factors. In the of the increase of general prices dur ing the present war; the most important of these factors greatly increased demands, the disruption of distributing processes, short age of labor and the decrease in production of various products
  possible by the fact that the demand was backed by the purchasing power. Other coun- tries have sent net addition of over $1,- GOO 0,000 gold which has been added to our monetary supply.
 The increase in the price level occasioned by the causes enumerated above has necesstated money to do the same volume of business, as judged by the amount of commodities. As example of this, increased wages and in creased value of inventories have made it nec- essary for business to increase their work addition of business has increased. During the per iod of the present war, according to the estl- mate of Professor Anderson, the volume of business has increased thirty per cent. as meas ured by unites of commodities. Railroads have carried increased quantity of merchandise. Pig iron production, a usual barometer of the volume of business, has increased from 30,722,000 tons in 1913 to 39,O43,00O in 1916 and 3S,195,O0O in 1917.
 And we should not overlook the fact that the increase in price has aided in the stimulation of American industry and augmented the total amount of production. In fact, under the ditions obtaining during the first three years of the war; the necessary expansion in industry could be secured only by rise of prices and concomitant increase in the volume of money.
 A nation at is an insistent buyer of com modities. At the outbreak of the European War, several such buyers entered market. Their insistent buying power led to inten- sfcation of the market demand. Industrial plants in laying plans for expansion to take of war contracts went into the market bid ding for capital in the form of building ma chinery materials and also labor. In order to get this additional supply and to shift it from other lines of production it sary to pay higher prices. Other industries, not working contracts found that 1t difficult to retain their skilled labor and to get materials at usual prices and a result they compelled to offer higher prices reduce their output.