H.—44

24

the comparisons being made' between July, 1914, and various elates on which the last statistics are available in the respective countries :—

This table, has been furnished to the Boa.rd by the Government Statistician, and, although it deals with the retail prices of foods, it can be taken as indicating approximately the rise in the general price-level. The conditions created by the war have been dominant factors in the rise of prices since' August, 1914. The first effect of the declaratiem of war by Germany was a speculative rise. As pointed out by Professor Irving Fisher in his forthcoming volume, " Stabilizing the Dollar in Purchasing-pewer : the Way tei Stabilize the Price-level without fixing Individual Prices "—a manuscript copy of which has been kindly sent by the author to the Hon. W. D. S. MacDonald, the Acting President of the' Beiard —" sudden and arbitrary speculative ' mark-up ' prices usually accompany war, and the mark-up in 1914, like most others, was temporary. It reached its maximum in the United States in September, 1914. As soon as it became clear that market conditions would not justify it (anel this became clear after about a month) speculators were forced to reduce prices again, and until near the close of 1915 no great rise in prices occurred in the United States. From the close of 1915, however, the rise has been far more rapid than before. The rise before the war, between 1896 and 1914, great as it was, amounted in the aggregate in the United States to only one-fifth of 1 per cent, per month ; in Fmgland to stil l less ; whereas during the war the rise amounted to 1| per cent, per month in the United States, and to much more in many other countries- in Germany anel Austria to 3 per cent, per month, and in Russia apparently to 4or 5 per cent, per month. To these German and Russian rates there is no parallel among the, records of index numbers whiedi have been computed. If before the war we could become excited over a continued average up-grade of one-fifth of 1 per cent, per month, we may partially understand some of the Russian economic unrest with an uphill, movement more than twenty times as steep, anel probably still steeper under Bolshevism. As yet the evidence is not all in, but the index number of wholesale prices of the United States,Bureau of Labour rose 107 per cent, between 1914 (before the war) and November, 1918. Retail prices in the United States rose 79 per cent., in England 133 per cent., in France approximately 120 per cent. It is fair to say that the, war doubled prices in the United States, Canada, England, and trebled them on the Continent of Europe ; while in Russia it multiplied them by perhaps ten. The result is that the problem of the price-level is throughout the world perhaps the greatest economic problem which the war has left." Later in the same volume Professor Fisher states that, although the, data covering the war period are so meagre that it is impossible to express the relation in exact figures, we ma)' still arrange the different countries in the approximate order in which their prices have -risen. This order of ascending prices is—lndia, Australia, New Zealand, United States, Canada, Japan, Sweden, Switzerland, Denmark, Italy, Holland, Fmgland, Norway, France, Germany, Austria, and Russia. The real cost-of-living problem arises from the fact that the. quantity e>f things in general each unit of value, will buy varies with every increase in the total supply of money relative' to things in general. The unit of value — i.e., the sovereign or the' pound sterling—if it were a perfect measure of value, should remain constant in purchasing-power, just as the yard measure remains constant in length, the lb. constant in weight, or the pint constant in quantity ; but under our present monetary system each unit of value increases or decreases in purchasing-power with every increase or decrease in the quantity of money, and creates the! same confusion in industry, trade, commerce, social relationships, and contractual obligations as would be created if a yard measure were to be increased or decreased in length according to the number of yard measures in existence, or if a. pound (avoirdupois) were to increase or decrease in weight according|to the number of lb. weights in existence. On account of the fact that changes occur in the purchasing-power of the unit of value, the price of things in general— i.e., the value of everything—seems to increase or decrease in a most mysterious manner, and it makes the, task of calculating the national dividend and its equitable distribution almost incapable of performance. For, after all our price statistics eif things in general have been

Country. Comparison between .July, 1014, and Increase per Cent. South Africa New Zealand Inelia Australia Spain United State's Canada Denmark Holland (Amsterdam) United Kingdom Switzerland.. France (Paris) Portugal (Lisbon) Prance, (other towns) Italy Norway Sweden .. February, 1919 .. May, 1919 .. .. November, 1918 .. April, 1919 April-September, 1918 .. February. 1919 .. March, 1919 .. January, 1919 December, 1918 .. May, 1919 . . .. March, 1919 January, 1919 . . May, 1918 December, 1918 .. September, 1918 .. December, 1918 .. . February, 1919 35 12 51 45 51 69 76 86 103 107 139 148 151 160 167 175 234