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WE HAVE NO GOOD INDEX OF GENERAL WAGES

Strange as it may seem when we consider the large number of labor bureaus, we have no general index of all wages. That is because interest centers more on the differences in wages than on the similarity of trends. The following facts are pretty well established. The wages of unskilled labor advanced faster than did the cost of living. The wages of skilled labor advanced markedly in some industries and localities while in some it advanced but little. The struggle for the adjustment of wages to the "H. C. L." is still going on and a general leveling is to be expected. That labor should be content with only such advances as equal the advance in the cost of living was not to be expected. Wages were advancing before the war and the forces then at work are still powerful.

THE LAG IN THE ADVANCE OF WAGES

It is well known that wages lag behind commodity prices when inflation is at work. They also fall more slowly when deflation sets in. This in turn has the tendency to put the brakes on the fall in prices except in times of crisis.

That wages will gradually reach a level with the present level of prices is generally admitted to be certain. It is probable that the wages of unskilled labor, which went up faster and, on the whole, further than the wages of other labor, will be the first to feel the reaction. It is to be expected that, as the movement of labor from one trade to another lessens, labor will become more efficient. But the process will be gradual.

MACHINERY AND LABOR-SAVING DEVICES

War and post-war periods have often been periods rich in new inventions, but even more pronouncedly periods of the more intensive use of all known forms

of machinery. This is a natural result of the feeling that labor is dear. As affecting the increase in production in the next two years, this factor is of importance.

TRANSPORTATION

The effect of the great efforts that we are now making to restore and improve our transportation facilities will be felt during the next two years.

Taking all four factors together, there is reason to believe that there will be increased production during the next two years.

WAR DEMAND, RECONSTRUCTION DEMAND, AND FUTURE DEMAND

There are always three quantities in the equation of prices. They are money, supply of goods, and demand. The interaction of these three determines the general level of prices. War demand, so far as our industries are concerned, practically stopped the day of the armistice. Reconstruction demand was mainly for restocking both of consumers' and of producers' goods which had been allowed to run down during the war. Comment has already been made on foreign demand, which raised our exports. Since the close of the war, it has developed that there is a scarcity of housing facilities of a quality up to the new standards of living of the classes whose standard has advanced. But capital is still loath to go into building until the future of rents and of prices is more clearly determined. The rapid changes in economic status during the war raised up a new class to be supplied with luxuries and comforts for which they had not before been in the market. All these factors created cross currents and temporary currents in demand which raised some prices far above the general level. These "crazy" prices are now being reduced and the false impression is being created that all prices are on the run. During the period of inflation, there was great confusion

of price increases which was perplexing to buyers and sellers alike. Competition did not work with its usual smoothness. Clumsy efforts at governmental price regulation added to the confusion and delayed by many months the restoration of intelligent knowledge of market conditions.

A return to more normal conditions is indicated. Among the expressions recently current in the Bankers' news sheets were: "A changed buying attitude on the part of the consuming public"; "People are becoming impressed with the necessity of getting better value for the household dollar." These expressions reflect the approach to normal conditions of demand.

CONCLUSIONS AND FORECAST

I may now state the conclusions which I think are warranted by the facts brought under review.

First: During the next few years prices will tend to become much more uniform. The range of differences will be less. Some prices were recently more than five times as high as they were before the war. A general leveling will go on. Abnormal demands are now passing. The cost of production will once more assert its regulative power over prices. Many prices will come down, but others will advance.

Some index numbers show a fall to date of 35 per cent from the so-called "peak." The comparison is of little value, because the crest of the wave was so broken and fluctuations so violent. No one, to return to the illustration with which we began, would consider the highest drop of water in a breaking wave a proper measure of the crest. One must smooth the curve of the wave so as to keep in touch with a solid mass of water; the froth and high-flung foam is not the point to measure.

Second: Considering the large size of the monetary stocks, and the permanent fall in gold, the level of prices

will be almost entirely regulated by the increase in production. Aggregate production is certain to increase. But the fall in the general level of prices which is certain to come will come slowly. It is to be remembered that for nearly two years after the close of the war prices. were still rising. There is no reason to assume that they will fall any faster than they advanced and, as has been pointed out, there are forces which will tend to retard the fall. A fall of 10 per cent from the level of the winter of 1920, to be reached in the winter of 1922, is about all that it is reasonable to look forward to. I mean by this that, in the winter of 1922, $900 will buy as much of a large and representative list of commodities as $1000 would buy last winter. But, as stated above, there will be less extremely high prices, and many of those now low will advance.

Third: If, as is to be expected, European demand lessens its stress on foods, and our own crops are good, the fall in the cost of living may be larger than the fall in the average of all commodity prices. Possibly it may amount to as much as 15 per cent in two years.

Fourth: Wages will probably not show a general fall in so short a period, and some wages may advance. The class of labor that shows a marked tendency to become cheaper is unskilled labor, which advanced more than other labor and which will be first affected by the increased use of labor-saving devices.

Finally, I wish to repeat with special emphasis that a fall in the general level of prices, controlled as it is by general causes, is not to be confused with a general scaling down of every individual price. It is also well to add that war, insurrection, and a crisis originating in unhealthy European conditions, are eventualities barred from my forecast.

The temporary crisis is over and the normal course of deflation has probably begun.

PHILOSOPHY AND HUMANISM

J. LOEWENBERG

One of the most distressing things about philosophy, distressing alike to the professional and the amateur, is the lack of agreement among the thinkers devoted to its study. The want of harmony among philosophers is proverbial and scandalous. Survey the whole field of philosophic literature, and what is disclosed to your view? An army of thinkers arrayed in everlasting dispute. A legion of theories in mutual discord. A host of perpetually recurring questions still unanswered. What a seeming contrast to natural science! Antagonistic theories in science do not long enjoy equal prestige. There is, if I may speak the language of biology, a natural selection among them. They struggle for existence in a sense not merely metaphorical. Only those theories survive which through careful and sustained observation and experiment are found to fit the facts they are designed to explain or to interpret. Confrontation with observed and observable facts is in the last analysis the test which decides the fate of conflicting hypotheses in science. And many a scientific theory has died for want of evidential nutriment. The relation between antagonistic theories in science appears to be one of geometric ratio. The success of one hypothesis means proportionately the failure of its rival or rivals. The theories which succeed in becoming accredited and established condemn to extinction and oblivion all those

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