RISING PRICES AND THE PUBLIC 571 



improving run-clown properties, planning and laying out new residence 

 sections where demand is likely to go, and in other ways anticipating 

 the needs of the people. On the contrary, they are merely guessing at 

 changing values, holding property, not to improve it, not to supply any 

 need which they have foreseen or created, but merely hoping for higher 

 prices and handsome profits. Undoubtedly many persons have reaped 

 and many others will reap large rewards by this process; also many 

 have lost and many others will lose by it. But this is the important 

 point: all are neglecting any real industry, so that for the public at 

 large there is a scandalous waste of energy, which should be turned to 

 useful purposes. 



3. Finally, rising prices have fostered extravagance. Some one has 

 facetiously remarked that we are suffering less from the high cost of 

 living than from the cost of high living. This is in a large measure 

 true. The point here is that the high living has resulted in a consid- 

 erable degree from the increasing cost of living. 



The ordinary consumer feels clearly enough the greater cost of 

 practically everything he buys compared with fifteen years ago ; but he 

 also receives a greater money income, whether in the form of profits, 

 interest, wages or even salaries. On the one hand, he realizes perfectly 

 that money is not worth so much as in 1897, for prices are higher; at 

 the same time he has an ingrained feeling that the value of money never 

 changes. He receives now more actual dollars and he feels almost 

 correspondingly better off and spends according to more lavish stand- 

 ards. Further, after paying for food, rent and other necessaries, 

 although the sums are large, he has now left a larger surplus than in 

 1897 to be used for other things. It is particularly the value of this 

 surplus that he does not understand ; it is only apparently larger, actu- 

 ally it is smaller. And it is particularly the spending of this chi- 

 merical sum that has led to extravagance. 



We have to do here with a peculiar contradiction in feeling. In 

 one sense people are perfectly aware that the value of the dollar has 

 decreased, for prices are higher; but in another sense they have the 

 ingrained notion that the value of the dollar is a fixed, absolute, 

 unchanging thing. We may call this contradiction, the paradox of 

 the sense of value. This paradox is common even among persons 

 trained in the science of money. It has led many classes of people to 

 adopt unwarranted scales of expenditure, especially in reference to 

 amusements and various forms of display. 



For an illustration, suppose that since 1897 prices have increased 

 50 per cent, and wages 40 per cent. Then a working man who received 

 $600 a year in 1897 and spent $400 for food and rent, receives now 

 $840, and spends $600 for food and rent. Naturally he feels better 



