Page:Stabilizing the dollar, Fisher, 1920.djvu/38

xxxiv new gold pursues low prices throughout the world and raises them.

15. Tracing the Invisible Source of the Tide. The rise of prices from inflation seems mysterious because, in any individual case, such as the rise of butter at a grocery store, the only visible reason is the rise of some other price, such as the wholesale price of butter. The effect of the abundance of money among the grocer's customers is too small and gradual to be observed. But this small, unobserved element was also present as a part explanation of the rise of the wholesale price and of every anterior price which helps explain that price. This element, apparently so small in any one market, turns cut to be the large element when all markets are considered.

16. Other Causes than Money include bank deposits, the velocity of circulation of money and of deposits, and the volume of trade. Usually the chief factor is money.

1. The Evil of High Prices Is Not General Impoverishment. If all prices and incomes rose equally, no harm would be done to any one. But the rise is not equal. Many lose and some gain.

2. Contracts Upset. When prices rise, the creditor loses; when they fall, the debtor loses.

3. Salaries and Wages Slow to Be Adjusted. They rise or fall more slowly than prices. The purchasing power of wages just before the United States entered the war averaged only two thirds of what it was ten years earlier and after the war it was still less.

4. Rates Fixed by Law or Custom Also Slow. Trolley