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others of attempting to raise prices unduly, and still others 

 blamed them for the rising costs of living. These accusations 

 have been propagandized so effectively that there is a large 

 number of intelligent people who firmly believe that farm- 

 ers are or will be the cause of "inevitable" inflation. 



Incomes Have Risen Faster than Taxes 



Heavy taxes on industry, distributors, and the moderate- 

 salaried groups reduced their purchasing power. The great- 

 est increases in income went to the low-income groups ; since 

 taxes were not applied in proportion to the increase in their 

 pay envelopes or in proportion to the decrease in consum- 

 able goods, they had more income than that to which they 

 had been accustomed. Most persons in this group spent their 

 incomes on a current basis and saved little. Since this was a 

 large group, their newly created purchasing power exceeded 

 the decreases in the purchasing power of the higher-income 

 groups, which were subject to heavy taxes. The net result 

 was an increase and a shift in the demand for commodities. 

 Higher prices have accompanied and will continue to ac- 

 company such programs. 



Price Control Is Difficult 



Under a system of freely fluctuating prices, the price of a 

 food in a country is determined primarily by world condi- 

 tions and secondarily by its internal conditions. The effect 

 of these world forces has been merely modified by govern- 

 ment regulations. Each country is attempting to operate a 

 more or less isolated economy which reduces to some extent 

 the importance of external forces on its internal price struc- 

 ture. This is a larger undertaking than is generally realized. 

 Normally the general price level responds to world rather 

 than to national influences. It would be as difficult for the 

 United States to do business at a price level differing from 



