higher than the low level in 1897. This is according to the figures of the United States Bureau of Labor. According to Bradstreets's the increase was 52 per cent. For our present purposes let us take roughly 50 per cent. Now observe the increase in the different classes of commodities: farm products advanced 110 per cent.; lumber and building materials 69 per cent.; food 54 per cent.; metals and imple- ments 48 per cent.; clothing, fuel and lighting 35 per cent; drugs and chemicals 33 per cent.; house furnishings 24 per cent.; miscel- laneous items 45 per cent.
We should note that the articles entering into the food and shelter of the ordinary consumer have advanced most, also that these items, i. e., food and shelter, require about two thirds of the ordinary family expenditures — among the working classes as much as three fourths. Therefore, allowing for this fact, our estimate of 50 per cent, is clearly a conservative statement of the higher prices paid by the consumer now compared with 1897.
Our proposition is that as a result of this increase some classes of incomes have been unduly diminished and others correspondingly in- flated, all to the detriment of the public. The following points should make this proposition clear.
1. Wages have lagged behind in the upward movement of exchange values and have brought consequent losses to the working classes. Money wages have advanced only about 40 per cent, compared with 50 per cent, in prices. Consequently, while the ordinary laborer receives now more dollars than in 1897, he receives considerably less purchasing power, less comforts for himself and his family, less real income.
But, why this loss ? Merely because changing conditions in supply and demand reveal themselves more readily in prices than in wages. In a shifting exchange level, unless special forces intervene, wages move behind prices, advancing and likewise receding more slowly. Consequently, in an upward swing the wage-earning classes lose in real income, while in a downward swing they gain correspondingly. The explanation is that wages are controlled more by custom and social standards than are prices. When real conditions of supply and demand change, prices usually respond readily enough, still not without the retarding influence of custom. But with wages, custom is a heavy break upon change, allowing proper readjustment only after a consid- erable period.
The writer believes that under normal conditions of exchange real wages should have advanced in recent years. Disregard price : look at
- These calculations are based upon the index numbers of prices published in the Bulletin of the United States Bureau of Labor, March, 1911.