A look at the history of prices shows the interesting fact that, while prices have sometimes fallen, they have generally risen. The high cost of living has been for centuries a source of complaint. In the 16th century, people objected to the price of wheat, which was three to ten times what it cost during the preceding 300 years.
WORTHLESS PAPER MONEY
Where, through ignorance of monetary science, irredeemable paper money was used, prices have sometimes gone up quite "out of sight." This was the case with the famous assignats of the French Revolution, and the "Continental" paper money of our own Revolution. After the Revolution a barber in Philadelphia is said to have covered the walls of his shop with continental paper money, calling it the cheapest wallpaper he could get! Jokes were also heard of a housewife taking a market-basket full of this "money" to the butcher's shop and bringing home the meat in her purse! This money became a hissing and a byword; and, even to this day, one of the favorite expressions for worthlessness is "not worth a Continental." We see the same situation repeated again today with Russian paper money.
But our first scientific measurement of price movements began with 1782, the beginning of Jevons' index number of wholesale prices in England.
COMMENTS ON FIGURE 1
Figure 1 shows the course of prices in England from that date, and also, for comparison, that in the U.S.
Figure 1 - Price Movements of the United States and England from the Earliest Index Numbers Through the First Years of the World War
Showing, in general, a close similarity. England was on a paper basis, 1801—1820; and the United States, 1862—78. The dotted lines for these periods show the prices as translated back into gold.
The conspicuous feature of these curves is their great irregularity. Practically never are they for any length of time at all horizontal. Sometimes, even in time of peace, a variation of over 10 per cent. is shown in one year. The curve for the U. S. shows, at the time of the Civil War, a very considerable rise (especially as measured in terms of paper), followed by a decline beginning in 1873 and continuing to 1896. The fall in the first part of this period was accentuated by the return from a paper to a gold standard. From an index number of 100 in 1873, the index number dropped to 51 in 1896. This decline resulted politically in the famous Bryan "Free Silver" campaign.