Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1919-04-11
HISTORY REPEATS ITSELF
BEFORE OUR VERY EYES
Men Are Waiting Now as in Past Cen
turtles for Fall in Prices
Which Never Came

Which Never Came
THE man who is delaying business
l. enterprise in the hope that prices vii
come down is very much like the maj
who sits on the shore of the ocean wait
ing for the water to dry up so that he
can run his motorcar to Europe on the
bed of the sea.
The economists who are familiar with
the financial history of the world arc
telling US that prices have reached new
level. from which they are not likely to
recede. There may be exceptions due
to peculiar conditions, but they will be
exceptions.
Professor Fisher. of Yale, has re-
minded US that the general level of prices
! is dependent upon the volume and rapid
| ity of the turnover of the circulating
medium in relation to the business to be
transacted. If the number of dollars cir
cuated in cash and by bank checks doubles
while the service to be rendered by this
circulating medium remains constant
the prices will come near to doubling.
This is what has happened time after
time in the history of the world. There
was a price revolution in the sixteenth
century following the influx of gold from
the Americas. Europe was flooded with
new money and prices went up. People
thought that the condition was tenn
porary and we suppose many business
men decided to postpone new enterprises
until the prices came dCwn again. But
they did not come down. A new price
level was reached.
To skip the intervening years with
their successive expansions of the
amount of money IN circulation due to
new discoveries a the precious metals
or other causes we come to the close
of the nineteenth century, when within
the memory of most adults the gold fields
of South Africa, Cripple Creek and
Alaska began to turn out their yellow
food, and when the invention of the
cyanide process of mining made it pos
sible to recover gold from ores that
hitherto had been discarded Prices
again rose and what men paid 81 for
| ten years carrier cost them $l.50. The
| prices in the sixteenth century did not
| return to their former level and prices
in the nineteenth century stayed up and
! have continued to rise in the twentieth
century. The conditions brought about
by the war have forced them up still
higher.
Let US look moment at the amount
Of money in circulation here at different
| periods. In 1900, for example, it was
approximately S2,000,OOO,00O or just
short of S27 per capita. This amount
had risen by 1914 to $3,40O,O 100000, or
$34.53 per capita. In 1918 it was more
| than S500000G, 900. or more than $50
| for every man, woman and child in the
country. In eighteen years our circu-
lating medium has more than doubled in
actual amount and has nearly doubled in
proportion to the population. Since the
Federal Reserve banking system was
established it has been increased by the
addition of S2600,000.000 in Federal
Reserve bank notes. The use of trade
acceptances as commercial paper, dis.
countable at the banks, has expanded
bank credit to an enormous extent anc
has had the effect of still further cheap
cning the value of dollar.
An expert statlstician could plot thi:
expansion of currency on diagram
along with the increase in the indie,
prices Of typical commodities and thus
show how they move together in tn,
same direction.
Normal conditions-that is, condi
Stions like those preceding the war-ar
not likely to return. We have left tn,
old price level forever, un,ess all tn
teachings of economic history are wrong
The individual business man know
that he cannot reduce his prices YER
much because the price of labor is hig
and the price of raw materials, save il
exceptional instances, is also high. AM
the price Of raw materials is high be
cause the cost of sbroducing them is de
pendent on the cost of labor. And labo
is high because the increase in the mum
ber of dollars kas decreased the pur
chasing power of each dollar.
No government interference wit
prices can permanently affect the pre-
vailing conditions. Thus far il has pro
duced confusion and dissatisfaction in al
quarters. In the case of steel, which i
an exception, the government has trie,
to keep the price at level higher thai
the natural conditions warrant. Tn
heavy demand for the commodity TO
war purposes has come to an end. 1t
export to Europe is likely to fall off, TO
the European nations are forced by dir
necessity to produce at home all the stee
possible. They have no money left iron
the war expenses to pay for foreign steel
Our steel pen are likely to be confne,
to the home market for several years t.
come. The law of supply and deman
will affect the price and it is likely t.
reduce it somewhat, but hardly to tn