The Washington herald., 1920-03-01

preciated value OF the dollar. The
dollar has deprecated in value be-
cause we have put in five years
$4,000. 900. 900 additional purchasing
power into the hands of our peo-
pie through the expansion Of cur
rency and Of banking credit: There
is about $4,000. 900, 900 more cur
rency and bank deposits in the coun-
try than there was in 1915. The
currency has been increased by the
importation of gold and the issue
Of Federal Reserve bank notes. The
bank deposits have been increased
by the granting of additional bank
credits. When a bank makes a loan
the amount of that loan is in the
main usually converted into a de-
posit. The amount Of the deposit
gives to the holder effective buy
ing power. The increased effective
buying power represented by the
SIS. 900, 100000 additional currency
and bank deposits is the true rea-
son for the general rise If prices.
There Is weight to be given to
many other causes that have con-
tributed to advancing the prices Of
specific things or special classes Of
things. In a sense. however, all
these causes are the waves on the
surface, while the great cause for
the rising tide of general prices Is
the accumulated buying power that
has resulted from increasing cur
rency and bank credits more rapid
ly than production has increased and
making the total of currency and
bank credits bear a new and larger
relation to our total trade than ever
before.
Prosperity and Labor Improvement.
n period of real prosperity? Has
there not been an improvement in
the general standard of life? Has
not labor been, put in the position
where it commands more comforts
than 1t has had heretofore?
"Superficially II would seem that
we were in period of general
prosperity and that the whole peo-
pie, by and large. were living In
greater comfort-indeed, were in
dulging in greater extravaganza In
the purchase of luxuries-than ever
before. That is. however. only a su-
perficial appearance. Innumerable
instances can be cited that would
Indicate proof of the theory that
there had been an advance in the
standard of life even to the point of
extreme extravaganza in the pur-
chase of luxuries. That view,
however, presents only a portion
of the picture. 1t is perfectly true
that in a period when prices ad-
vance regularly and rapidly. as they
have during the last five years,
there are greater profits made by
everyone who owns stocks of goods.
To them profit comes unavoidably
and almost without volition on their
part. The manufacturer who buys
raw material in an advancing mar
ket can sell his product at a higher
price than would normally have
been warranted, considering the
price he paid for this raw material,
because by the time he has complies
ed the manufactured article the
price Of the raw material has so ad-
vanced that any new order for the
manufactured product would have
to be priced on an increased basis
of cost. 1t has been estimated that
the raise of 230 per cent in the gen.
eral price level has resulted in prof.
its aggregating 100000, 200, ,oUv.
Much of that sum, 1t is true, Is in
the form of paper profits, but much
of 1t has been realized. and the peo-
pie who have realized it, having
made money so easily, have in turn
spent 1T not infrequently in an ex-
travagaht way.
Unequal Tendencies.
1T is true. too. that IN some por-