6 



SCIENCE 



[N. S. Vol. XLVII. No. 1201 



was done on a great scale throughout the 

 country for every essential commodity. 



Finally, when the conditions are set 

 forth, it is especially easy for those in a 

 given line of business to cooperate to push 

 prices upward and thus greatly increase 

 their profits. This also was done exten- 

 sively for many commodities. 



Based iipon the first factor, the second, 

 third and fourth factors have come in to 

 accelerate advancing prices, each with re- 

 inforcing power. The tendencies above de- 

 scribed, once started, are cumulative, and 

 the enhancement of prices goes on vnth in- 

 creasing velocity. The prices of foods are 

 advanced ; the employees must have higher 

 pay because of the increased cost of food; 

 the raw materials for manufactured ar- 

 ticles are advanced; the manufacturer 

 charges a higher price for his articles be- 

 cause he must pay more for his labor and 

 an increased price for his raw materials. 

 The jobber and the retailer did likewise. 

 At each successive stage the advance of 

 prices is made sufficient to cover the in- 

 creased cost and an additional increment is 

 placed on top. The cycle thus completed, is 

 begun again with food, and the circle once 

 more gone around. The second cycle com- 

 pleted, the conditions are right for a third 

 cycle, and so on indefinitely, with the re- 

 sult that prices rose beyond all reason, like 

 a spiral ascending to the sky. 



Faihtre of Control hy Supply and Demand 

 Under pre-war conditions, when the sup- 

 ply was equal to and often greater than 

 the demand, the prices, if not adequately 

 controlled, had been largely controlled by 

 competition, except where there had been 

 cooperation of purchasers or manipulators, 

 or both, to control the market; but the 

 facts presented show that under the war 

 conditions the laws of supply and demand 

 and competition adequately to control 



prices have broken down, for the simple 

 reason that for every staple commodity the 

 demand is ever greater than the supply. 



It is not possible to give percentages of 

 the extent to which the demand exceeds 

 the supply for each commodity; but it is 

 safe to say that the percentages upon the 

 average are not large, probably not more 

 than 20 per cent., and for scarcely any 

 commodity more than 30 to 40 per cent. 

 Thus for coal the demand for the current 

 year over that of last year is 20 per cent., 

 and the excess demand for this year over 

 the production not to exceed 10 per cent. 



However, the moderate excess demand, 

 taken in connection with bujdng in advance 

 of needs, of forestalling by speculators, and 

 combination to control the market, has 

 been sufficient to increase the prices of 

 many essential commodities by 100, 200, 

 300, and even 400 per cent., and for cer- 

 tain articles greater amounts. It is there- 

 fore clear that there is no relation what- 

 ever between the excess demand and the 

 increase of prices under the competitive 

 system. An increase demand of one tenth 

 or one fifth may increase prices two, four, 

 or even five fold. 



There is no reason to suppose that the ex- 

 cess demand wiU decrease in the near fu- 

 ture; indeed it is probable that next year 

 the demand for commodities will be greater 

 than this year ; and this situation of excess 

 demand over the possible supply will al- 

 most certainly continue to the end of the 

 war and possibly even longer. So long as 

 the excess demand exists, if supply and de- 

 mand are allowed to have full play, prices 

 will continue to climb. 



The situation above described in regard 

 to an inadequate supply of essential com- 

 modities and their ever-increasing prices 

 demonstrate that, under the war conditions, 

 the laws of supply and demand and compe- 

 tition are insufficient to secure the neces- 



