P

RICES are affected by the rapidity with which money circulates. They are affected by the use of supplementary devices, such as bank checks. They are affected by competition and the per capita production of the soil. They are affected by the faith, hope and charity in the realms of speculation and enterprise; but mastering all these factors of prices are the actual amount of gold coin and bullion in sight, and the amount in annual output of the mines.

The former financial stringency and present unsettled conditions occasioned in this country by the war in Europe serve to exemplify the above. The excessive and continued importation of gold at this time is an exceedingly grave and growing menace to the orderly and safe progress of business in this country. There is a normal status, or equilibrium, between countries of the world, in industry, in gold holdings, and in all relations with each. other. That status is not fixed, and cannot be changed violently without reaction. It is being so changed now,

and the prudent man will beware of the reaction. The United States is obtaining more than its share of the world's gold, as gold is distributed under ordinary conditions, and when the war is over it will not be able to hold the excess. It is impossible to use additional credit made available by further increase in gold reserves without raising costs and prices in this country, and the war is not going to last long enough for us to get far on a career planned only for war conditions.

It is believed that when the leading nations of the world are drawn together in conference for the restoration of Peace, and for what is believed will result in universal and permanent Peace between all nations, consideration will necessarily be given to the determination and establishment of a stable International Standard of value and other appropriate remedies.

The primary causes of the increasing cost of living, the remedies, and some of the proposed methods of applying these remedies are here outlined:

The Increasing Production of Gold.

The primary or master cause of the high and increasing cost of living throughout the world is the depreciating purchase power of money through the world's enormous and constantly increasing production of gold. In 1900 the world's production was $254,556,000. In 1913, $455,345,423, or almost double what it was in 1900.

A Dollar Buys Less.

The weight of the gold dollar remains unchanged, but its value or purchasing power does not. It is generally recognized that as the production of gold increased the value of gold must necessarily decrease, but as gold is the standard of value, its depreciation is displayed in its decreasing purchasing power, or in other words, in a constant appreciation of the things which the standard coins will buy. During the last fifteen years, although the gold dollar has remained the same in size, its purchasing power has fallen

Dissolution,

govern

ment control, tariff revision downward on trust controlled commodities. Patent law revision.

Abolition of middlemen's agreements.

Cooperation.

Reclamation, i. e., irrigation and drainage projects.

Conservation,

i.

e.,

Federal and State preservation of vast territories. Scientific and intensive farming, i. e., reclamation, fertilization and conservation of the soil. Vocational education;

farm financing.

during this period to perhaps twothirds of its former purchasing value. This depreciation in the value of the respective standards of value, or this shrinkage in what Professor Fisher terms the "Monetary Yardstick," has injured all those who have received a fixed number of dollars, such as wage earners, salaried men, savings bank depositors, and the like.

As a remedy, reference is here made and indorsement given to Professor Fisher's plan for an "International Standard of Value," to be fixed and regulated by an International Monetary Commission. As a method carrying the proposed remedy into effect, I cannot do better than to quote

the words of Professor Fisher relative to his plan:

"My own plan virtually amounts to restoring the seigniorage on gold, that seigniorage to be annually readjusted according to the statistics or index number of the price level. This plan would tend to restrain the coinage of gold through the mints. It would not destroy the gold standard, but merely stabilize it. Gold bullion would still be the ultimate concrete basis of every dollar; but instead of

the bullion being fixed, and varying in purchasing power, it would be fixed in purchasing power and varying in weight. The plan would not be subjected to the danger of political manipulation, which has been the weak point in most proposals for producing a monetary stability. It would work as automatically as the mint works."

Monetary Inflation.

Closely allied with the first mentioned cause of the increasing cost of living, and in fact a mere species or result of it, is Monetary Inflation. The precise extent to which these new supplies of gold, entering for the most. part the bank reserves of the principal financial centers, and thus becoming the basis of credit, have affected prices cannot be definitely determined, as the influence is an intangible one, but it is generally conceded to be one of the universal factors. There can be no doubt, however, that in place of the former fear of the scarcity of gold, such a redundancy has arisen that swollen bank reserves have stimulated loans at a low rate, manufacturing plants have been extended, and the prices of commodities have advanced with a rapidity which has lessened the purchasing power of wages, and has brought the world under a true "Cross of Gold." Furthermore, statistics show that, during the last ten years in this country, there has been a very great and unusual increase in the amount of business transacted by check. In fact, in large cities, bank checks perform from 90 to 95 per cent of the transations and settlements of business. Furthermore, the concentration of the population in cities has facilitated the rapid utilization of such form of "Token Money."

The present financial stringency occasioned in this country by the war in Europe serves to exemplify the above. At the beginning of the last week in July the business world was moving along as usual. By the end of the week, the Great War in Europe had demolished all the vast machinery of credit and exchange by which modern. business is transacted. The headlong effort everywhere was to convert paper into gold and far-off credits into

339

credits at home. The former period of financial inflation and seeming prosperity was being replaced by a period of liquidation-a return to basic or hard money-and gold is the unit of ultimate redemption.

Two primary remedies have been proposed in connection with the subject of Montetary Inflation, to wit: 1. Monetary Reform, and (2) Banking Reform. Briefly stated, the first reform may be carried out through a return to basic or hard money, etc., and the second through Currency Reform, Guaranty of Deposits, etc.

As the increase in wages has not kept pace with the constantly depreciating purchasing power of money, or in other words with the constant appreciation of the price of the things which the standard coins will buy, it has been proposed to offset this appreciation in the prices of commodities through an increase of wages. Two primary methods of securing the desired increase of wages are recognized, to wit: (1) Industrial Warfare, or in other words, Strikes, such as have typified past policies of Labor Organizations, or (2) Labor Legislation, in the form of Old Age Pensions, Minimum Wage Laws, Industrial Insurance, Conciliation Boards, etc.

The Breaking Down of Competition.

(1)

The second great cause of the increasing cost of living is the Breaking Down of Competition. Two primary remedies have been proposed: Trust Regulation, and (2) Control of Middlemen. As a means of regulating the trusts, a number of remedies have been proposed. One is to dissolve them and re-establish competition, and the other is to reorganize them and put them under government control. A method which might at least curb the great growth of trusts would be Tariff Revision downward on trust controlled commodities. Still other reformers propose to revise the Patent Laws.

Another remedy for restoring competition is the Control of Middlemen, who have in many cases done away

with formerly existing competition. One method proposed in this connection is the Supervision of Middlemen's Associations, while others propose the Abolition of all Price Agreements. Another method is for the people themselves to furnish competition with the middlemen by means of cooperation among themselves.

The Declining Per Capita Production From the Soil.

The third great cause of the high and increasing cost of living is the Declining Per Capita Production from the Soil. The tendency of the times is for the people to aggregate in large cities and to devote themselves to manufacturing, commercial and distributing occupations, rather than to agricultural and farming development. The result is that there are proportionately fewer people raising the necessities of life. Between 1890 and

1910 the average number of wage earners in manufacturing pursuits in the United States increased 55 per cent, while those engaged in agriculture increased 40 per cent. The remedies proposed are Increased Available Acreage and this may be carried out through Reclamation and Conservation; and last, but by no means least -Increased Production through Scientific and Intensive Farming.

From the foregoing it is clear that a stable International Standard of Value must be adopted, together with such uniform currency and banking systems as are best calculated to prevent the recurrence of money panics and financial disturbances. Competition should be restored through trust regulation and the control of middlemen, and the per capita production of the soil still further encouraged and extended by reclamation, conservation, vocational education, farm financing, and other effective methods.

AGNES LOCKHART HUGHES.

Author of "Prison Reform," "If the "The Farce of Trial by Jury," "Price ness," etc.

In the past fifty years, temperance has increased to a wonderful degree, not, however, because of the work of the prohibitionist, but in spite of it. Man's morals never have been and never will be changed by legislation. To pass a law prohibiting the sale or use of any alcoholic beverage, is a farce, for no such law will ever be cbeyed, but, instead, is only held up to ridicule. Whisky, which is half alcohol, and strong spirits packed so as to be inconspicuous, will be smuggled into the State, into the city or town, and finally into the home, where it will do more physical injury in ten days than beer or light wine could do in ten years.

Travel through the State of Maine, Kansas, Arizona, or any of the other "dry" States. You will see a workingman lying beside the road drunk to stupefaction, his pockets empty except for the drained whisky flask. Compare this sight with the workingman of Germany or France, or any of the German sections in New York City: On a Sunday or any other day, you will see him taking his glass of beer, or the Frenchman his glass of wine, temperately, with his family, his family, wholly unmolested.

People Could Own What They Use," Maintenance-The Salvation of Busi

their subject. To accuse the earnest prohibitionist of being insincere would be wholly wrong. Of course they are sincere, but so were the men sincere who once tried to make people religious by the thumbscrew and the rack. Fanatical prohibitionists state that the world would be infinitely better if the "curse of drink" were removed. To this we surely agree, for the "curse of drink" is intemperance, and we are all as anxious to do away with that as the most radical teetotaler.

Just because a man has had a son turn out a drunkard, does not by any manner of means indicate his right or capacity for making laws to regulate the drink traffic. On the contrary, it proves that the father did not understand the drink question, or his son would not have turned out a drunkard. Statistics prove that three-fourths and over of sons who are drunkards at twenty were born of fathers who were prohibitionists. The boys had to drink in secret, so they became drunkards as soon as they got the opportunity. If this is true of prohibition families, it is likewise true of prohibition States. Any effort to make entire communities total abstainers against their will, increases drunkenness and demoralizes those communities.

In Russia there are two kinds of drinks: Vodka (which is about the same in alcoholic strength as whisky), and beer or wine. From sundown Saturday to sunrise Monday the sale of Vodka is prohibited; the sale of beer or wine is not interrupted. No drunkenness whatever is ever seen on Sun