The state herald., 1920-11-26
PRICES ARE GIVING WAY
ALL ALONG THE LINE
Break Has Developed With Sudden
Swiftness

I
railroads has not increased. The only
reason that can be given Is that
wages and prices have been advanc-
ing and practically all authorities
upon monetary science agree that an
increase Of the amount Of money In
circulation. or Of bank credit circulat-
ing as money. will have Of itself the
egcet Of raising prices. II the medium
Of exchange 10 increased In volume
without q corresponding increase in
the amount Of commodities to be han.
died the medium will depreciate. That
corresponds to our experience with
the greenbacks during the civil war
and common sense tells US that It IL
inevitably SO. You cannot increase
the supply Of goods by printing money
with which to buy them or by Great
ing credit through banks.
The banks are open to criticism for
having allowed loans to increase so
rapidly. but they are not without de-
Tense. Viewing the situation as each
bank viewed 1t. seeing only that part
of the situation which each bank could
see. 1t seemed to be necessary to sup
ply more credit In order to keep bust.
ness going. Each bank was urged by
its customers to give them the sup.
port which seemed to. be necessary to
carry on their business. Prices were
to a great extent under worldwide in
fluences. They we're rising and the
demands Of labor for wage increases
were incessant.
Primary Causes Due to War
The war created q practically unlim.
tied demand for labor and materials.
The government let contracts right
and left and the contractors went out
into the market and bid against each
other for labor and materials. And
ordinary business OF the country did
not as rule fall off. With employ
ment for everybody. and with rising
wages and the enormous disburse-
ments from the government treasury.
there was greater trade than ever be-
fore. The banks were called upon MS
n matter OF patriotic duty TO lend free
" to enable people to subscribe to the
loans and also to support business. All
this was done upon the belief that
they must do II TO promote produc,
ton. and so long us there was any
slack In the industry. II did increase
production. But when every man Is
ut work and every machine running.
that is about all you can do. You
reach the point then where the only
! way any one employer can increase
his output is by stealing labor away
from some other employer. And that
is what we did We had procession
OF wage-earners moving from one
. shop to another. and getting their
, wages raised at every move. There
/ was turnover In some Of the ship.
yards Of something like so to 50 per
? cent u month. When your Industrial
Organization Ia doing all that II can
: do. II you attempt to drive the ma
chine harder you do not Increase pro
duction. you simply drive up wages
/. and prices.
/. Was Prosperity Fietitlous7
. The war prosperity. then. was no,
real prosperity. II was n prosper
ity based on borrowing. supported by
, the taxing power OF the government
r and by the pledge Of taxation 10,
r years TO come. and that so.cnlied pros
: perity has placed us upon very high
j. level OF wages md prices. In the
!. opinion OF bankers and Of experienced
, mon. and OF economists and students
!. OF the subject generally. II Is n dan
: gcrous level upon which TO do busI
/. meas.
/ Now why Ia II n dangerous level up
, on which to do business? Because II
In II situation brought about by abnor
nal and temporary conditions. since
I tho cause was u temporary one. II I,
, Just ms inevitable that when Il hns
. pasncd and It's influence has passed
that price shall turn downward again
/ provided. Of course you have the sam,
: standard OF values ns before.
. Now II that reasoning Ii sound II II
imprudent and dangerous for u busi
. ness man TO come out OF the period
0 OF war prosperity upon this high ievc
. Of costa and prices. and go charging
and booming along ~ tho condition,
= were going 70 remain tho same al
!. ways. II was certain that they wouit
[ NOT remain tho aania. And II n dan