The Farmington times. (Farmington, St. Francois County, Mo.) 1905-1926, 1920-01-30
THE CAUSE OF HIGH PRICES

THE CAUSE OF HIGH PRICES
If we should say that the war is the
cause of the present high level of
prices, it would be a truth, but not
the whole truth. In order to under
stand how the war has brought about
high prices, what are the influences it
set afoot, and why they continue 10
work long after the fighting has
ceased, it is necessary to be more eX-
plicit.
The proXimate causes of high prize
es fall under three heads. First, there
are the tremendous destruction of life
and property during the war and the
loss of production caused by trans
fering millions of men from indus
tries producing the necessaries Of life
either to the battlefield or to indus
tries making only weapons of destruc-
ton. We have an inevitably diminish
ed supply of food and manufactured
articles to meet demand not dimin-
ished in anything like the same de-
gree-if, indeed, it is diminished at
all. The most fundamental of eco
nomic laws thus works to raise the
price of almost every imaginable ar
ticle.
Second, there is the combined eff
feet of a lowered rate of production
and a widespread spirit of eXtrava-
gance. 1t is the universal testimony
Of employers that less work per man
is being done than was the case be-
fore the war. Hours arr shorter, la
Dor is less contented and industrious,
wage demands, excited by the emer-
gency pay given during the war, are
greater; and at the same time people,
tired of the sacrifices and economies
of war time, are spending money free
ly and paying without demur prices
that would have stopped almost all
buying six years ago. Here is the
profteers' opportunity. He is not a
cause, but symptom. Prices would
be high without him; but it is the
reckless determination of the buying
public to have what it wants at any
price that enables him to add some
thing more to the already towering
edifice of prices.
Finally, at the bottom Of it all is the
initiation of the money supply of the
world. Abroad that has been accomp-
lished by tremendous issues Of paper
money, after the example this country
set in the Civil War. In the United
States it is the result chiefly of the
very large issues of government bonds
and notes and the accompanying eX-
pansion of credit based upon these new
certificates Of value. During the war
our circulating currency, including
bank credits, increased in quantity
nearly two billion and half-at
rate at least five times as great as in
the years Of peace. With so impress
sive an increase in the stock of mon
ey and no corresponding increase in
the supply of goods, only one result
could be looked for.
These three causes, which may be
described as material, morad and
financial, all work diligently together
to push prices up and keep them up.
The only medicine that will affect
them is a proper combination of in
dustry and thrift, both personal and
national. When we are content to
work steadily enough and hard enough
to make the goods that shall fill up
our depleted supply; when we are
willing to save our money, instead of
spending it on what tickles our fancy,
regardless of the price, we shall have
gone a long way toward bringing
down the price to normal level
The initiation of our money by gov
eminent loans was inevitable. Wars
are always costly, and they cannot
be paid for on the nail. But the path
of safety lies in retiring the bonds as
fast as possible, even if heavy taxa
ton is necessary in order to do it, and
in taking steps to prevent the unlimit-
ed use of government notes and bonds
as a means of swelling the amount of
bank receipts. The officers of the
Federal Reserve Board understand
the situation, and they have shown
their intention to check the advancing
wave of speculation by raising the
rates of discount whenever the situa-
ton threatens to get beyond control.
There are several ways in which by
work or by thrift we can each of US
mitigate the pressure of high prices,
but high prices will continue in great
err or less degree until we bring our
supply of purchasable goods and the
amount of our monetary medium into
something like the relation they bore
to each other before the war.