4 BULLETIN 909, U. S. DEPARTMENT OF AGRICULTURE. 



As is usual in suck violent adjustment, the drop began slowly, 

 increased in rapidity, then dropped more gradually, and apparently 

 has now (June, 1921) about completed the violent drop. Judging by 

 the Civil War experience and by the slow rate of recession now, some 

 price recovery is to be expected in the near future. This does not 

 mean that all prices will rise. When more products rise in price 

 than fall, the general price level will rise, but many products will 

 be going down. It is to be expected that those that- have dropped 

 excessively will rise, and that prices of most things that are much 

 above the general price level, will fall. 



Another characteristic of prices during a period of rapid change 

 in the general price level is the violence of fluctuation. In normal 

 times the prices of each individual farm product usually fluctuate 



INDEX NUMBERS OF WHOLESALE PRICES 



CIVIL WAR AND WORLD WAR 



CIVIL WAR 1856-1860 = 100 WORLD WAR AUG.I909-JULY 1914=100 



£50 

 200 

 150 

 100- 



-■ 













?A 





















- 



250 

 200 

 150 











V 





y \ 































, 



V 



-Vx 



*\ 





-j. v 4 



















£ 







/y 















"■&, 



**v-- 





•'"'—••>. 



-— . 



-»•„ 



'< 



.^. 



5 



































'"•>= 















1861 1662 1863 1864- 1865 1866 1867 1868 1869 1870 1871 

 1914- 1915 !9I6 1917 1918 I9i9 1920 1921 



1872 



1873 



1874- 



1875 



1876 



1377 



1878 





Fig. 2. — Wholesale prices In the United States, by quarterly periods, showing the violent drop and partial 

 recovery after the Civil War and the more violent drop after the World War. 



about the general price level. In periods like the present there is 

 more than the usual uncertainty as to supply and demand, and an 

 even greater disturbing factor is the shifting of the general price level 

 about which individual prices fluctuate. Figures 6 to 11 and 13 show 

 that sudden and violent changes in prices occur very frequently when 

 the general price level is unstable. 



During each of the periods of rapidly rising prices, as from 1899 to 

 1912, the cost of living has been widely discussed, largely because 

 wages have tended to lag behind prices and salaries and incomes from 

 investments have changed even more slowly. 



When prices fall very rapidly farmers and others who go in debt 

 to produce articles to sell find the payment of debts to be increasingly 

 dimcult. At each period of rapidly falling prices the money question 

 has been generally discussed. 



