Page:Walter Renton Ingalls - Current Economic Affairs (1924).pdf/82

68 anthracite coal, whereof the production has not increased and the price for it is bid high. The people whose buying power has been diminished must still have that essential fuel, which then they can get only by the sacrifice of something else. If on the contrary needed commodities are produced in superfluity the price for them goes low, as in the instance of wheat, or even to pre-war level as has recently happened in the instance of gasoline.

The position of prices in Europe is confused by the derangement of exchanges, the absence of gold basis, and the real inflation of paper currency in some of the countries. In general we may deduce, however, that prices in Europe continue far above the pre-war level, just as with us, and that the true explanation is even more unmistakeably the deficiency of production, which insofar as western Europe is concerned is probably not more than 75 to 80 per cent of the pre-war figures.

On this subject, the Swiss Bank Corporation, whose occasional bulletins on the international situation, financial and economic, have attracted wide attention in European business circles, predicted in a recent review that the tendency of prices for commodities will in the long run continue to be toward the pre-war level, and that such a level may be re-established in the not very remote future. This bank combats the theory that the fall of prices since the high point of 1920 was a result of intentional “deflation.”’ That theory, it argues, could hold good only when production and consumption are normal, and in this case appeals only to “the imagination of manufacturers and producers who have always been inflationists at heart.” It continues: