Perth Amboy evening news., 1919-06-18

Information and Education Service,
Department OF Labor, Franklin Il.
Miller, Director:
In January. 1919, the Division OF
Public Works and Construction Devei.
opment was organized as n branch OF
the Information and Education Ser
vice of tho Department Of Labor. Its
purpose was TO ba the stimulation of
the Interest of the Nation In public
and private construction with q view
to the creation of buffer employment
for labor during tho period of transit
ton of manufacturing Industries from
war to peace production. 1t was charg-
ed with the securing of data for the
. OF the construction industry. but
It's activities were also to comprehend
q study of the economic conditions af-
fecting industry. as a whole.
The New Commodity Price Level
1. Most people believed that the
high level of prices reached during the
war was caused merely by the extraor-
binary demand for commodities which
exceeded the supply. With the end of
the war n with war demand a thing
of the past, they quite naturally ex-
pected q sharp drop in prices and a
price level approximating In a short
time the prewar price level.
.. II wal also commonly believed
that the Industrial capacity of the
world had been greatly expanded un-
der the stimulation of war orders, and
that his expansion would bring sharp
competition between rival concerns in
time of peace. Furthermore. 1t was
thought that there would be after the
war great armies of unemployed work.
men, who would be compelled by ne
costly to accept work at low wages;
that there would be sharp competition
among the leading nations in interna-
tfonal trade; and that buyers general
fy, looking forward toward an era OF
lower prices, would postpone buying.
However, the expected great fall in
prices has not occurred. and 1t Is not
likely to occur for the following rea-
sons:
8. Tho rise In prices during the war
was not merely the result of a great
demand for goods and of a scarcity OF
certain goods 1t vas largely brought
about by means Of imitation of the cur
rency by the governments at war and
by the neutrals. either by the direct
issue of paper money or by the issue
of bonds. Although wal orders are
now largely q thing of the past, the
extension of credits still exists as a
continuing cause of high prices. There
Is little to indicate an early contraction
of credits
A. World production In general dur
s he-w war, contrary to a widely held
view, was not abnormalfy large. This
is shown by statistics of world pro-
duction of leading basic materials or
industry such as coal, petroleum. IRON
ore, and of cotton, sugar, wool, wheat
and other agricultural products. Con-
sequently the abnormal consumption
Of goods for war purposes has depleted
tha utocka nf commodities of tho
world.
5. Armies OF unemployed, in the
United States as least, have not mate
rfalized, and an actual labor shortage
IL In prospect. Wages are not likely
to be lowered.
6. Buyers since the armistice, al
though showing q desire to wait for
lower prices, have been compelled to
buy to meet their daily needs.
Z, II the production capacity of In
dustry should be greatly increased.
lower prices would not necessarily fol-
low. II there Is a strong enough de-
mand for commodities, prices need not
fall, no matter In how large volume
commodities are produced. There Is
every reason for expecting such a
strong demand. The world is now
suffering from a great shortage of dur
able goods-buildings, transportation
facilities, and industrial equipment.
Furthermore people, both in the
United States and Europe, have a
stronger desire for consumers goods
than ever before. This is true partly
because of the scarcity of certain goods
during the wal period and partly be-
cause of the new experiences through
which tens of millions have passed.
which have awakened in them desires
for goods and services they v en-
joyed before.
6. Business men OF the United States
need not hesitate to plan for an I'M
mediate depression and no collapse OF
values need to be feared. The man
who goes full speed ahead will gain
an advantage over his procrastinating
competitor which will far outweigh
any possible slight decline in costs of
production.
o. Prices are not going to fall much.
II at all. We are on a permanently
higher price level, and business men
should go ahead on hat basis.
10. The general level of prices Is
dependent upon the volume and rapid
ity of turnover of the circulating me
dunn in relation TO the business TO pc
transacted thereby. II the number Of
dollars circulated by cash or by check
doubles, while the number of goods
and services exchanged remains con-
slant. prices will about double.
II. The great price changes in his
tory have come about in Just this way.
The price revolution of the sixteenth
century was a result of the great influx
OF gold and silver from American
mines. A similar increase I'm prices
all over the world occurred between
1886 and 1914. following the discev'
cry of rich new gold fields. and the in
PRODUCTION of cheaper methods OF min
ing.
IL. The present rise in prices has
resulted from the great extension or
credits by the countries at war. and a
more economical use of gold reserves
as O basis of credit, and not from any
great Increase in the gold supply OF
the world. In the United States. how
ever, the supply of gold has been
greatly increased because of our large
excess of exports of commodities. ana
our present gold reserves would per-
NIT of a much greater expansion or
credits than exists now.
Is. There is a little likelihood OF a
fall In prices in the United States. The
gold reserve. which Is now the basis
Of our currency. is not likely to leave
the banks and return to general cir
cuiation, since this Is contrary TO