COMMENTS ON FIGURE 3
The World War furnishes important examples of this. In the United States the curve for the quantity of money in circulation and the curve for the index number of prices run continuously parallel, the price curve following the money curve after a lag of one to three months. It was in August, 1915, that the quantity of money in the United States began its rapid increase. One month later prices began to shoot upward, keeping almost exact pace with the quantity of money. In February, 1916, money suddenly stopped increasing, and two or three months later prices stopped likewise. As figure 3 shows, similar striking correspondences have continued to occur with an average lag between the money cause and the price effect of apparently about one and three-quarters months.
On the whole, the money in circulation in the United States rose from three and one-third billions in 1913 to five and a half billions in 1918, and bank deposits from thirteen to twenty-five billions, both approximately corresponding to the rise in prices.
Taking a world-wide view, the money in circulation in the world outside of Russia has increased during the war from fifteen billions to forty-five billions and the bank deposits in fifteen principal countries from twenty-seven billions to seventy-five billions. That is both money and deposits have trebled; and prices, on the average have perhaps trebled also.
The Bolsheviki are a law unto themselves. They have issued eighty billion dollars of paper money, or more than in all the rest of the world put together. Consequently prices in Russia have doubtless reached the sky, though no exact measure of them, since the Bolshevist régime, is at hand.
The increase of over thirty billions in the money of the world (outside of Russia) is as Austin says "more, in its face value, than all the gold and all the silver turned out by all the mines of all the world in 427 years since the discovery of America."
The conclusion toward which the foregoing and other arguments lead is that, in this war as in general in the past, the great outstanding disturber of the price level has always been money. If this is the case, how fruitless, except as treatments of symptoms, are price-fixing, or campaigns aimed at profiteers! The cry of profiteering may hinder a real solution of the difficulty by diverting attention from the real issue and fanning and giving up an object to the spirit of revolt. Money is so much an accepted convenience in practice that it has become a great stumbling block in theory. Since we talk always in terms of money and live in a money atmosphere, as it were, we become as unconscious of it as we do of the air we breathe.
ASSOCIATE EVILS OF HIGH PRICES
We have now considered the cost of living situation under the two questions "What is it?" and "Why is it?"
The third question, "What of it?"—i. e., what are the evils connected with it—is more easily answered today, when it comes home to all of us, that it might have been 10 years ago.