Page:Walter Renton Ingalls - Current Economic Affairs (1924).pdf/74

60 a large extent of a different nature than during the war, but it was directly consequential from the latter. In 1920-22 there was a decline, which was more in commodities than in wages, followed in 1922-23 by a renewed rise.

The maintenance of high levels of prices and wages in the United States is popularly ascribed to inflation. We have fallen into the habit of talking about inflation and deflation, owing to their being convenient expressions meaning the raising or lowering of price levels, but in fact the majority of economists bold that there is no such thing as monetary inflation in the United States at the present time. This may be affirmed positively.

The price level is therefore determined by something else, and what else is there but physical demand and supply? As I have tried to make clear elsewhere, the natural demand of an increasing population in this country is directed against a supply that is not increasing commensurately. Let there be a reversal of this condition and I think it is quite obvious that prices will fall. I can see no good reason why they should not fall to the pre-war level if sound policies be established and complete freedom of competitive action be restored. They may not go quite so low, on general average. On the other hand, it is conceivable that eventually they may fall below the pre-war level.

We see ships now selling for much lower than pre-war prices; transatlantic freight rates at near the pre-war