PRICES AND PROSPERITY

Although President Hoover's business relief measures are widely hailed as constructive plans, a close examination of their substance reveals that they are designed primarily to preserve the situation, with its high prices and inflated values, which existed at the height of the post-war boom. It is assumed that this situation is essential to prosperity and that only lack of confidence has destroyed it.

Suprise and regret are expressed at the tendency of goods to revert to pre-war prices, but it is apparently only the natural reaction from abnormal war conditions. The price level rose rapidly during the war. Then followed an inflationary period when the credit of all nations was put to test and in most cases failed. During and after these times occurred an amazing attempt of the industrially advanced states to maintain exaggerated values in terms of money, upon the theory that prosperity depended upon high prices of finished products, securities, and land. At the same time improved processes of manufacture tended to force down the price level. But large doses of ballyhoo and misloading accounting managed to prevent the natural decline, although production costs were falling. Only the more sensitive commodity prices reflected the results of greater industrial efficiency. Security quotations in particular were fortified by gross misrepresentation, which is only now coming to light.

When lack of consumers' demand in the spring of 1929 made readjustment inevitable, the country's leaders with one accord fought liquidation and put forth all sorts of schemes to prevent it. The credit corporations propose to make frozen assets good by rediscounting credit which never should have been extended in the first place and by waiting for land values to rise. The Administration should realize that farm land may never regain its old value, that assets which are depreciated now may always remain so, and that the position of the price level has little effect upon prosperity.