Wool and worsted, more than twofold;

Bituminous coal, more than 2 times as much;

Copper, more than 2 times as much;

Pig lead, nearly fourfold;

Pig iron, more than threefold;

Steel billets, more than fourfold;

Spelter, nearly double;

Petroleum, almost double.

Retail prices of the foods given in the second table show advances corresponding to the wholesale rates.

The facts presented show that for the essential commodities of food and clothing, coal and the metals and their manufactured products, the prices have greatly advanced during the past two years, and the prices given for June, 1917 are not maximum prices. Since that month prices have continued to advance. This is illustrated by the price for cotton and hogs, which since that time have made record prices.

In order to gauge the changes during the past year there are here inserted the prices of some of the more important commodities for August 1, 1917, as compared with August 1, 1916:

For each of these important commodities the prices within the year, with the single exception of white potatoes, have more than doubled. These are indeed amazing advances in prices. The advances must not only stop, but there must be recession in the prices of necessities to reasonable amounts.

The unexampled prices of all commodities have placed a heavy burden upon the consumer and especially the consumers who are on a monthly salary or a day wage, and these constitute the great proportion of the population. It is true that there have been advances in wages, in some cases several advances, but these together seldom amount to more than 25 or at most 50 per cent; and therefore they are not at all in proportion to the increased

cost of living. Since the exaggerated prices have imposed hardship upon all people of moderate means, the situation has aroused general alarm. Serious trouble is likely to confront us the coming winter unless relief is obtained. If the war is to be won, economic conditions must be made such that those who have a small income will be treated justly.

THE CAUSES OF MOUNTING PRICES

One fundamental cause of the mounting prices is the unusual and extraordinary demand from abroad for all essential commodities. However, this has only been one factor in the process.

When it was once appreciated that there was a relative shortage of the essential commodities, the home purchasers, instead of buying ordinary amounts, purchased in advance of their needs. Thus the family, instead of buying flour by the sack bought a number of barrels. The same is true in regard to sugar. Similarly during the spring and summer of 1917, when it was appreciated that there was a shortage in coal, many manufacturers were trying to protect their businesses by accumulating reserves to carry them through the winter. The same was true of those who desired coal for heat. The consequence was that the demand of purchasers was far beyond what would have been necessary to meet actual needs had the ordinary procedure been followed. This frenzy of excessive buying has greatly aggravated the situation.

Another most important cause of the enhancing prices was that a time when there is great demand is especially advantageous for speculators to accumulate great stores of goods of various kinds and hold them for advances in prices. This was done on a great scale throughout the country for every essential commodity.

In the space allowed it is not practicable to summarize and discuss the measures which the government has taken to control prices and profits. The most important of these measures is the so-called Food Production Act, which gives very large powers in regard to control of prices, not only for all foods but for fuel. This law is supplemented by other laws. The enforcement of the Food Production law has been placed in the hands of food and fuel administrators, and also the principles which have been applied in regard to the control of prices of food and fuel have been extended by agreement to other important commodities, notably steel and

iron. In short, under war conditions, we have abandoned the principles that the laws of supply and demand and competition are adequate to the control prices of commodities, and we are depending primarily upon governmental regulation.

Finally, when the conditions are as above, it is especially easy for those in a given line of business at a particular locality to cooperate to push prices upward and thus greatly increase the profits of their business. This also was done on a vast scale for many commodities.

Based upon the first factor, the second, third, and fourth factors have come in each with reinforcing power to accelerate prices. The tendencies above described, once started, are cumulative; and the enhancement of prices goes on with increasing velocity. The prices of foods are advanced; the employes must have higher pay because of the increased cost of food; the raw materials for manufactured articles are advanced; the manufacturer charges a higher price for his articles because he must pay more for his labor and an increased price for his raw materials. At each stage the advance of prices is made more than sufficient to cover the additional cost. The cycle thus completed is begun again with food, and the circle once more gone around. The second cycle completed, the conditions are right for a third cycle, and so on indefinitely with the result that prices have been and still are rising beyond all reason, like a spiral ascending to the sky.

FAILURE OF LAW OF SUPPLY AND DEMAND AND COMPETITION

The facts which have been presented show that the law of supply and demand and competition adequately to control prices has broken down, for the simple reason that for every staple commodity the demand is greater than the supply. In normal years before the war the potential capacity of the United States for almost every essential commodity was greater than the home. demand. The agricultural lands were developed so as to produce a large surplus, all that could be marketed at home and abroad at a reasonable price. The coal mines were so developed that they could produce many million tons more than the market demanded. Steel and iron mills similarly were developed so as to meet not only the ordinary demand, but to respond quickly to exceptional demands Under these circumstances the prices, if not

adequately controlled, had been largely controlled by supply and demand, except where there had been coöperation of purchasers or manipulators or both, to control the market.

THE EXCESS DEMAND

The situation was wholly changed by the world war. For every important commodity the demand exceeds the supply. For the staple foods the demand is greater than any possible supply. For coal the demand exceeds the capacity for delivery. the demand is far beyond the capacity of all mills.

For steel

It is not possible to give average percentages of the extent to which the demand exceeds the supply; but it is safe to say that the percentage upon the average would not be large, probably not more than 20 per cent, and for scarcely any commodity more than 30 or 40 per cent. However, this moderate excess demand of say 20 per cent, taken in connection with buying in advance of needs, of forestalling by speculators and combinations to control the market, has been sufficient to increase the prices of many essential commodities by 100, 200, 300, and even 400 per cent, and for certain articles by greater amounts. There is no reason to suppose that the excess demand will decrease in the near future; indeed it is probable that for the coming year it will increase.

Notwithstanding the extraordinary efforts to increase production which our entrance in the war has created, vast new requirements for war equipment of all kinds, including foods, textiles, leather, metals for guns, munitions, etc., have kept the demand beyond the supply. At the same time this demand is created, there are taken from active production in this country more than a million men.

The allies probably have 20,000,000 men in the field and 20,000,000 more that are directly connected with producing munitions and materials for war consumption. Fertilizers have been lacking. In consequence of these facts and despite the most earnest and successful efforts of the British and French to greatly increase their acreage crops, especially wheat, their crops are certainly wholly inadequate to feed the people of these countries; for under normal conditions, hundreds of millions of bushels of grain and vast quantities of meats have been imported from the United States by England and France and smaller amounts by Italy.