Omaha daily bee., 1919-08-21
Causes of High Costs
abridged from an article by DR.. Nicholas
Murray Butler in the Santa Barbara (Cal)

is not new. 1t is not by any means condi-
ton due entirely to the war, although the war
has greatly increased the importance of some
OF the elements that enter into it.
The republican national platform of 1912
declared that the steadily increasing cost of liv-
ing has become matter not only of national
Importance but of worldwide concern.
1t added pledge that the republican party
would support prompt scientific inquiry into
the causes which are operative, both in the
United States and elsewhere, to increase the
cost of living. and that when the exact facts
were known it would take the necessary steps
to remove any abuses that might be found to
exist, in order that the cost of the food, cloth
ing and shelter of the people might in no way
be unduly or arthcially increased. For the first
time since that pledge was given the republican
party IS now in control of congress.
very much hope that through either the
committee on finance of the senate, the
committee on ways and means of the house of
representatives, with competent economic ad-
vice and counsel, All immediate and searching
inquiry will be made into worldwide causes
which now operate to increase the cost of liv
ing, with a view to ascertaining the exact facts
upon which public policy or industrial action
should rest.
These matters are far too serious to be left
to the demagogue and to the representatives of
special interests. Every man, woman and child
in this country is interested, first in determin-
second in ascertaining how that high cost may
be reduced
When we are sure that we know what the
causes are, we shall have gone long way to-
ward remedying the conditions of which we all
SO bitterly complain
There is one sentence in President Viii
sons address which should be repeated and
emphasized. 1t is this: THE world must pay
for the appalling destruction wrought by the
great war, and we part of the world, We
must pay share"
This statement has reference to the immedi
ate costs Of the war and is self-evident
In my Judgment scientific inquiry will
demonstrate that the causes which have been
operating tor nearly generation past to in
the cost of living all over the world are
these:
Initiation of the currency, which in turn
is in large part due to public and private ex-
travagance and waste. No one people has a
monopoly of initiation.
In 1906 the amount of paper money in cir
culation in France was 7,s00,000,000 francs; in
1914, it was 120OO0O00OO francs; and in 1919
it is no less than 40,000000000 francs.
In the United States we have been expert
encing steady imitation of the currency for 40
years. Down to 1881 our per capita circulation
had never gone above $40. Down to 1908 it
had never gone above $780, and down to 1916 it
had never gone above $40. In 1918 however,
it was $508l If this cause alone had operated
dearer, but to put it another way, money was
growing much cheaper.
Any attempt suddenly to correct initiation
would bring evils in its train. The real
corrective is public economy and private fru
gality and thrift. We must stop borrowing in
order to meet our current expenses if are
to begin to reduce the cost of living. 1t is
we'll enough to borrow when money is to be
used in productive industry which will more
than repay the cost of borrowing. 1t is quite
another thing to borrow in order to pay ones
daily household bills or to meet the current
penses of the government This means, first
increased costs and eventually ruin
Recent statistics show that no fewer than
l8 states in the American union are expending
annually more than their income from taxa
ton The aggregate obligations of the govern
ments of the world are estimated to have in
creased in five years from $40000O000OO to
S22O000000 0000, and the annual interest charge
on the government debts OF the world is esti
mated to have grown from $2000 900 900 to
$l000000000O
These facts, and the economic consequences
which they entail, explain one OF the main fac
tors in the high cost of living
2-The decrease OF industrial production
due in part to the war, and in part to the short
ened hours of labor throughout the civilized
world. The war transferred not fewer than
25,0000OO men from their customary work OF
production or distribution of goods to the task
destruction, and for their maintenance.
By so diminishing the number of producers
and correspondingly increasing the number of
consumers, prices were Immediately and neces-
sarily increased
3-The increased cost of food due in part
to the operation of natural economic laws in
the United States and elsewhere, and in part to
the shutting off from the markets of western
Europe of the great food supplies formerly OBJ
tanned from Russia, Roumanla and Hungary.
4-The heavy taxation that has been intro
duced in the United States and Great Britain
particularly the excess profits taxes, have oper-
ated to increase the cost of living. Not only
has excessive and unwise taxation checked
initiative in economic development, but it has
actually operated to compel the manufacturer
or trader in search of additional profits to in
crease his prices several times and more than
would have otherwise been necessary IN order
to have one dollar left after paying 81 to the
government.
5-Profteerng by individuals or corpora
tions having exceptional opportunities for such
policy. That there has been profteering, par
ticulary by retailers, and that this protlteerlng
should be sternly punished, are self-evident
facts. But all the prohteering would not have
operated to affect the cost of living very Sc
riously had it not been for the other and purely
economic causes that have been described.
When question of the present day costs is
gone carefully into, it will, | think, be found
that capital is securing very little if any more
return than before the war, while greatly in
creased amounts are paid out for labor and for
taxation. For example in the case of one par
ticular industrial corporation, careful COM
parison between the amounts paid in the year
1918 and the year 1918 shows excess is to be
accounted for in this way: Labor, 81 per cent;
taxation, per cent capital 5 per cent.
TOD AY