The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-05-31

IlNed allowances OF various Kinds
military pensions, retirement and serv-
ice allowances, disability and conpen-
sation grants trust and fiduciary pro-
vision.
Little need be said as to the plight
i of salaried classes. consequent upon
the increased cost of living; the fact
is one of widespread and intimate ex-
perience. 1t is an economic common
place that in a period of rising prices,
wages advance more slowly than COM
modify and service prices and SAL
aries more slowly than wages.
Wage. advances from 1914 to 1920
Is grossly inadequate. The wages of
we'll organized, skilled workers and of
unorganized but favorably located Gas
to proximity to cantonmonts, munition
plants, shspyards, war industries), UNI
skilled workers-have increased since
1854 as much as the cost of living,
and in some cases have gone much be-
yond.
Just as swiftly rising prices have in
flicted grave injury upon working and
middle class households, they have con-
ferred excessive gains upon favored
groups of manufacturers, wholesalers
and retailers 1t Is the inevitable con-
SEQUENCE of > sharply rising market
(which unduly benefits the active bust
ness man and merchant, the stock
holder as compared with the bond
holder. the borrowed as compared with
the creditor.
Twice as pinch Money.
In tracing the factors responsible for
the sensational rise of prices between
1914 and 1920. 1t is evident that we
have to do. in the main. with one gem
eral cause rather than with a body of
particular causes. and that this gem
eral cause is ultimate and basic and
not proximate and superficial. =
This prime cause of the High Cost
| of Lying" has been. first and fore
most, a fifty per cent depreciation in
the purchasing power of the dollar.
due to the gross expansion of our cur
rency and credit.
AS compared with the spring of
1914-the eve Of the Great War-the
people of the United States are carry
ing on their business at the present
time with practically twice as much
money and bank deposits. There has
been an increase in the actual circu-
i lating medium of the country from
S3,402, 015, 427 on June 80, 1914, to
s5,S46,171,213 on February 1, 1920;
| an increase in the deposits of national
banks, state banks and trust COM
panies from $1s,4SO, 600, 600 on June
80, 1914, to $25, 731, 600. 900 on June
80, 1919, and an increase in the indi-
vidual deposits subject to check of the
national banks alone from $S,440,-
747,000 on June 80, 1919, to $685.
$50 on November IT, 1919. Alto
gether it is likely that the country is
now transa citing its business with $15,-
600, 100000 more circulating medium
and deposits than five years ago.
There have been three stages in the
course of our imitation: (a) from the
outbreak of the World War in August,
1914, to the entry of the United States
into the great struggle an incoming
flood of gold served uncorrected as the
basis. of 2 towering credit structure;
(b) in the eighteen months of our
active belligerency, lavish supplies OF
credit by banku-loans thru certificate
borrowing were created, while the
sale of government bonds bearing in
terest well below the current interest
rate and the maintenance of an arti-
ficiaHy low discount rate paved the
way for note and deposit expansion
Co from the armistiee of November
1918, almost UP to the present, the
as to credit control were frankly DOM
mated by the policies of the treasury
Credit Used Too Freely.
The most serious factor of our war
time financing in it's subsequent eff
feet upon prices was the treasury s
large reliance upon bank borrowing in
connection with it's certificate issuing
and bond selling policies during the
period of active belligerency, and in
deed for some time thereafter.
Reliance upon certificates of in
debtedness in connection with wal
1
ligerency may perhaps be explained
and excused by the exigeneies of the
war period. Not even this justifica-
ton can be found for the resumption
of certificate borrowing at artificially
low rates eight months after the arrni-
stice, and the continued maintenance
of artificially low discount rates.
In addition to initiation as the pri
mary cause of high prices, there have
been important contributory causes
Wartime taxation, stationary produc
ton, disproportionate wages, lavish
public expenditure and private ex
travagance.
over and over a draelike effec
upon general business, the exces
profits tax has operated to aggfavat
| the tendency towards rising prices
This has been less in the nature of :
| direct ana immediate cause, as is con
| tended by many business men subjec
to the heavy burdens of the tax, thai
in indirect and COMPLEX fashion.
1t is impossible to overlook the fac
| that modern economic processes ar
interdependent as to price fixture, AM
that the forces making for initiation
once released there followed a viciou
circle of high prices higher wage
and still higher prices. Indeed, as Il
the case of war taxation, business Uel
have been encouraged to overprotec
themselves by discounting the likeli
hood of still higher wages, in fixini
their price lists.
Similar in effect was the policy pur
sued in awarding most of the wa
contracts on the 10 per cent cost plu
system. This necessarily tended to in
crease prices for materials and labor
because the higher the contracto
could make his costs the create
would be his profit. This opportunit
/ for swollen profits was availed Q