132 TWELFTH REPORT. 



able interference with the freedom of competition, an- old tariff placed 

 upon staple products of American agriculture or American manufacture 

 will have little effect upon prices. Manv argue that wages are higher 

 in this country than abroad and therefore the prices of certain goods 

 will necessarily be higher in this country than abroad ; but in view 

 of the multiplication and cheapening of the means of communication 

 and of transi)ortation. in ^'iew of the hirge numbers of immigrants which 

 are annually added to our labor supjvly. and in view of the low average 

 annual wage paid in this country, it is not unfair to declare that it 

 is not proven that wages in comparison with output are higher in the 

 United States than in England or Germany. 



In so far as the tariff is a factor in raising the prices of products 

 which are regiilarlj- produced within the country in quantities sufficient 

 to satisfy the home deinand, its action is the result of the development 

 of monopoly, partial or complete. The existence of the tariff' wall may 

 have hastened such development as the tariff' wall wards off the danger 

 of outside competition. 



It is granted that a tariff on goods not produced within the country 

 or produced only in small quantities will directly affect prices; but the 

 effect will be noticeable soon after the imposition of the tariff'. The 

 effect, as before stated, of such a tariff will not be such as to cause a 

 constant upward trend of prices. But barring these cases which may 

 arise under a tariff for revenue only as well. as under a tariff which 

 is primarily protective, the problem before us may be reduced to a con- 

 sideration of the indirect effect of the tariff. 



On the other hand, a protective tariff accompanied by monopoly or by 

 interference with freedom of competition, may be indirectly a very po- 

 tent force in affecting the price level of the protected articles, and, by 

 working back into the expenses of other than protected businesses, the 

 price level of a multitude of articles and services. The tariff is, there- 

 fore, chiefly important in the discussion of the increasing cost of living 

 in so far as it has fostered monopoly or has hastened the organization 

 of combinations which tend to destroy competition. Our problem may 

 now be restated by omitting the word tariff from the title. What is the 

 relation between the development of monopoly and the increasing cost 

 of living? 



The normal effect — the effect in the absence of monopoly — of the de- 

 velopment of large-scale, systematized industry is to reduce the expenses 

 of production, and, therefore, to reduce the level of prices for all 

 articles made under large-scale industrial methods. The period of rising 

 prices, 1896 to the present moment, has also been an era of consolida- 

 tion and integration of industry, accompanied by the speeding up of 

 workers and machines and by an increase in the product turned out 

 per wage earner. Looking at the matter solely from the side of in- 

 dustrial management, the period, 1890 to 1910, should have been one of 

 declining prices. On the contrary, this era marked by iinjiroved in- 

 dustrial efficiency, has been one rapidly rising i>rices. 



The swelling gold supply is one potent force wliich has caused the 

 price level to rise; but this agency ought to act fairly uniformly thruout 

 the Western World. An official English Report estimates that food 

 prices in that country increased nearly eight per cent in the period, 



