( 156 ) 



merable ways in which these variable factors may combine. 

 Even if the parrot knew, he would not have sufficient vocab- 

 ulary to tell us all the answers. Man may have the vocabu- 

 lary, but he does not know how these factors combine to 

 influence prices. For this reason market prognosticates and 

 the price-fixers are essentially erroneous forecasters. 



In Wartime All Factors Make for Higher Prices 



The factors affecting the price level are always fluctuat- 

 ing, but in time of peace they fluctuate little and the fluc- 

 tuations frequently compensate. There is considerable varia- 

 tion from year to year in the supply for one commodity, but 

 the supply of all commodities ordinarily is relatively un- 

 changed. Similarly there are changes in the demands for 

 various products, but the demand for all commodities nor- 

 mally changes little. Usually, also, the supplies and demands 

 for money are relatively stable and the amount of precious 

 metal in the monetary unit is also stable. Under such condi- 

 tions the general price level fluctuates much less than in time 

 of war. 



During major wars both commodity and monetary fac- 

 tors affecting the price level change decidedly. World-wide 

 changes occur in the supply of and demand for commodities 

 and in the supply of and demand for money. Sometimes 

 warring nations get into financial difficulty. Then the ex- 

 change value of their currencies may fall. 



An appreciation of the behavior of these five factors in 

 time of war will help one to understand how a major war 

 causes an upheaval in commodity prices. 



Supplies of money in tune of war normally do not di- 

 minish. 



War restricts the supply of commodities. It is impossible 

 to draft fifty million men from the world's productive ma- 

 chinery for military activity and maintain normal produc- 



