THE FALL IN PRICES.
It is often disagreeable to admit a plain truth, and there are truths which one may safely admit in private which have an almost incendiary character when printed. To admit in private that the commercial outlook is not good costs nothing; to print the fact and prove it is to run the risk of aggravating the causes of the unpromising condition of affairs. The public is like a patient whose chance of recovery depends upon his not knowing his critical condition. If his nerves get to playing around that danger, they may drag him into it. To state in printed words that the times are bad and growing worse might be to tell a truth; but it would tend to produce the worse times. This is the reason why editors are either silent, or even lie a little, in seasons of financial and commercial depression. But it is also true that in our present circumstances there are unpleasant things which admit of mitigation, and even of radical cure; and it is perhaps wiser to state what most of us know and suggest the remedies for an evil case.
It is known that the wages of laboring men and clerks all over the country are being cut down. It is probably within the mark to say that seven millions of wage-earners (of all classes) will receive in 1885 an average of ten per cent. less compensation for their services than they received in 1884. Assuming a very low average for the old wages, $1.25 per day, the total reduction in wages for the year will amount to more than $260,000,000. This amount will of course be taken from the net total of trade. The workmen and clerks will buy two hundred and sixty million dollars worth less of goods in 1885. The reduction will be dispersed over a large area, but it will not spread into a thinness which will render it impalpable. Nor does the reduction end with the workmen. All the persons of whom workmen buy manufactured goods will buy less for their own consumption—they also will have less to buy with. This class is a very large one, and there are few of us who do not belong in it—are not in some way dependent on workmen for patronage. To say that all these will reduce their annual purchases two hundred and sixty millions, carrying the reduction up to five hundred and twenty millions, is probably within the mark. We may as well consider in this connection the reductions in the price of farm products, another great drain on the volume of trade. Agricultural products are worth at most ten per cent. less than in 1883. The effect of the reduction in prices of farm products acts more disastrously on trade, since farmers usually double their caution. They will not merely buy ten per cent. less; they will buy as little as possible. Old clothes, old wagons, old tools, will be kept in use, and it may be within the mark to say that the loss of farmers’ trade of all sorts will amount to as much as all the others—to five hundred and twenty millions more. One thousand and forty millions taken off from the net total of sales of goods will necessarily be keenly missed. The payment of all the national debt in a prosperous year would be easier and more pleasant. If it had no compensations this reduction would crush the life out of us. At least it is a burden to bear. Economies upon customary spending in a single household matter but little, but economies in millions of households—less buying of customary comforts—are a large matter. They are not merely a consequence of hard times; they make the times hard. And we are so bound together that the enforced economies in the families of workmen act on the whole purchasing line with mathematical certainty. It is a good thing, a beneficence of natural order, that there are compensations. We see these natural offsets most easily by looking back at the case of the farmer. He has to sell his food in a cheaper market, and wants to buy also in a cheaper market. He has made food cheaper for the workman, and he wants the goods made by the workman at less cost. He wants the same amount of cloth, sugar, salt, tools, etc., for the same number of bushels of wheat. It is the cloth, tools, etc., that he wants as a farmer. As a debtor, indeed, he wants the same number of dollars; and this is his real pinch. He is in debt, and has to pay in the fall of grain a twenty per cent. premium on what he owes. As a producer, he would, however, suffer no harm if all other prices fell as much as the price of grain. If, then, by the corresponding and simultaneous reduction of the price of food and of wages, the ten per cent. less money would buy the same things to eat and wear—if the reduction were equalized all round—nobody would suffer. The farmer’s grain would buy as much as before; the workman’s wages would buy as much. Goods of all kinds would be so much cheaper in money terms, but just as valuable in barter terms. The reduction would be only in the figures and not in the facts of trade. The footings of the ledgers would be smaller, but the ledgers of comfort would show an undiminished balance in favor of happiness.
Will it work out in this way? Partly it will; partly it will not. Cheaper food will partly balance the accounts of all parties, but some accounts will not balance. Prices sink or rise unequally. And this is not half our trouble. In these matters “thinking makes it so;” the belief that we are losing ground causes the sliding back which we dread. There is a reluctance to buy what we are accustomed to buy. The reduction in wages makes men feel poor; and to feel poor is to be a poor customer of the seller. Suppose that a general fall in prices is going on—a possibly complete explanation of our troubles—then we must remember that all values are disturbed. We can not make a “horizontal reduction” by a stroke of the pen. It must be effected slowly and painfully and irregularly and in detail. The results are suffering and depression of spirit. The strain is severe, but it has to be borne; and patience really lightens all burdens. If we reflect that these stretches of bare ground in trade are really safe roads—safer than the smoother paths along which we have driven gaily and recklessly—we shall have confidence to keep company with patience, and the two will make a rough road tolerable, if not enjoyable. Honest and industrious souls thrive in such times. Speculative rogues thrive in good times. The honest man’s chief trouble is that he will get into debt. His worst calamity is he is paying now with eighty-cent wheat debts contracted in dollar-wheat prices. The poor man can not be helped. May the Lord be good to him.
“But” one will say, “this is not our whole disease. We are really at war. Workmen are falling under the wheels of a great machine called progress; and the machine is driven by forces too powerful for any hope of resistance. It is not a mere readjustment of prices; it is a life and death struggle; and the god Competition must be dethroned, or the people will perish.” We do not believe this wild-eyed reformer, but we do expect a hard winter. Let us all remember the poor.