Prices

"Prices. \- In the following article, which should be read in connexion with those under Cost Of Living and Wages, the changes in prices of commodities during the years 1910-20 are considered with special reference to the United Kingdom. An account of the American system for controlling prices in the United States is appended.

  
(I.) Wholesale Prices in General. - The movement of wholesale prices in general is measured by the method of index numbers. The prices of commodities for which definite market quotations for definite grades exist are selected as typical in their changes of prices in general, a year or longer period is chosen as base, the price of each commodity is equated to Too at the base period and the price in other years expressed proportionately, such numbers being called price ratios. (Thus if the price of wheat in the base period was 60s. and in another year 45s., the price ratio in the latter year would be written as 75.) Then either factors are chosen expressing the relative importance of the commodities as deter Exports Imports $ 166,8J9 1,236,889 mined by the total sum spent on them in a period or some other criterion, and each price ratio is multiplied by the corresponding factor, the sum of the products is divided by the sum of the factors and the resulting quotient is the index number of wholesale prices for that year; or the more important commodities are represented by two or more price quotations and the resulting price ratios are simply averaged to obtain the index number. There are many variants of method and there has been much controversy on every detail of the process; in fact, however, the precision of the result depends not to any great extent on the particular method followed, but principally on (i.) the number of independent prices included and (ii.) on the dispersion of the various price ratios in the year to which the index number refers, so that when prices are moving on the whole in the same proportion the index number is more accurate than when some are moving rapidly upwards and others are stationary or falling. In normal times when changes are moderate it has been shown both from theoretical considerations and by comparing the numbers obtained by various methods that the precision of the method is high, but during the war period the movements were rapid and unequal, the conditions of accuracy were lost and no very precise measurement could be obtained. The object of the method of index numbers is to average away the variations due to the special conditions of supply and demand of particular commodities, and to obtain a resultant which measures the effect on prices of general causes, such as the supply of currency.

It is found in practice that the necessity for restricting price quotations to those of commodities for which the same grade and quality is in the market in large quantities through a long period of years restricts the choice greatly, and limits it to raw materials or articles in an elementary state of manufacture. In some cases the price used is based on the average value of all grades of the commodities (e.g. of wheat, of tea, of coal), imported or exported, but this introduces a possibility of error since the average may change owing to a change in the relative quantities of high and low grades independently of any change in price. The three index numbers of wholesale prices in use in the United Kingdom are the Board of Trade's, the Economist's, and the Statist's (formerly Sauerbeck's); the first uses average values to some extent, and applies factors to the price ratios to allow for the relative importance of commodities, the second and third use market quotations of definite qualities of goods and take a simple average of the price ratios.

Table I. exhibits the general movement in the twelve years before the World War, and shows how little the variation of method affects the result in this period. The year 1903 is taken as the starting point, since it is after the great fall of prices ending in 1896 and the subsequent rise and the inflation of 1900-1, and may be regarded as a normal year.

Year

| 

Board of

Trade No.

I n N

Index d

| 

Sauerbeck's

Index No.

| 

Economist 

Index No.  
  
---|---|---|---  
  
1903

| 

83

| 

82

| 

79  
  
1 904

| 

84

| 

83

| 

81  
  
1905

| 

84

| 

85

| 

81  
  
1906

| 

87

| 

91

| 

88  
  
1907

| 

91

| 

94

| 

93  
  
1908

| 

89

| 

86

| 

83  
  
1909

| 

90

| 

87

| 

84  
  
1910

| 

94

| 

92

| 

90  
  
1911

| 

94

| 

94

| 

95  
  
1912

| 

99

| 

I oo

| 

108  
  
1913

| 

100

| 

100

| 

100  
  
1914

| 

\- 

| 

97

| 

96  
  
Jan. - June

| | |   
  
TABLE I. - Movement of wholesale prices in the United Kingdom 1903-13. (In each case the index number of 1913 is equated to moo.) Sauerbeck's index numbers for 1903 on the same basis for separate groups of commodities were: - Vegetable food 90; animal food 85; sugar, tea, coffee, 86; minerals 74; textiles 79; sundry materials 83. Wholesale prices had therefore been rising from 1902-13 (with a short inflation and depression in 1906-8), but tended downwards in the first half of 1914.

[[Table Ii]]. - Statist monthly index numbers. Average Jan. to July 1914 taken as Ioo.

End of

| 

1914

| 

1915

| 

1916

| 

1917

| 

1918

| 

1919

| 

1920

| 

1921  
  
---|---|---|---|---|---|---|---|---  
  
Jan.

| | 

117

| 

150

| 

193

| 

225

| 

2 33

| 

2 9 8

| 

239  
  
Feb.

| | 

122

| 

1 54

| 

199

| 

227

| 

227

| 

317

| 

220  
  
March

| | 

126

| 

158

| 

205

| 

228

| 

224

| 

316

| 

215  
  
April

| 

100

| 

128

| 

163

| 

209

| 

230

| 

224

| 

323

| 

206  
  
May

| | 

130

| 

164

| 

212

| 

231

| 

235

| 

316

| 

196  
  
June

| | 

129

| 

159

| 

218

| 

233

| 

242

| 

311

| 

189  
  
July

| | 

129

| 

158

| 

214

| 

233

| 

250

| 

309

| 

\-   
  
Aug.

| 

106

| 

130

| 

163

| 

213

| 

237

| 

258

| 

308

| 

\-   
  
Sept.

| 

108

| 

131

| 

163

| 

214

| 

239

| 

260

| 

302

| 

\-   
  
Oct.

| 

109

| 

133

| 

173

| 

219

| 

239

| 

272

| 

291

| 

\-   
  
Nov.

| 

108

| 

137

| 

183

| 

222

| 

237

| 

280

| 

272

| 

\-   
  
Dec.

| 

III

| 

143

| 

187

| 

225

| 

237

| 

285

| 

252

| 

\-   
  
Average for year Statist. . 131 164 212 2 33 249 301 - Economist 128 167 212 2 34 2 44 298 - Board of Trade 127 164 214 235 261 327 - Immediately after the declaration of war in 1914 prices began to rise, and with certain interruptions continued to mount up till the spring of 1920, when the index numbers reached their maximum (Statist 323, end of April; Economist 326, end of March; of Trade 357, average of July). Till Oct. 1917 the increases showed a remarkable regularity averaging 2% monthly, equivalent cumulatively to 27% per annum; on this scale the index in the successive Octobers would leach in 1914 106, in 1915 135, in 1916 171, in 1917 217 and in 1918 258, numbers which' (except the last) are in close agreement with those shown in the' table. This was, however, a definite seasonal movement superimposed on this regularity; in the first three or four months of each year prices moved up with special rapidity, while in the summer the increase was slackened and in some cases was replaced by a fall. The check in the increase in the summer of 1917, following a specially rapid rise, is attributable to the control of prices which by that date was general. From Aug. 1917 prices continued to rise in spite of control till Sept. 1918, but the rise in these 13 months aggregated to only 13% (2 39 against 213). After the Armistice prices fell slowly for five months, dur ing the season in which in previous years the increase had been' specially rapid, but expectations of a permanent fall were not realized; in the year beginning April 1919 the index rose from 224 to 323 or 44%.

| 

Board of Trade

| 

Economist 

| 

Statist   
  
---|---|---|---  
  
1919 July

| 

Ioo

| 

moo

| 

I 00  
  
Aug.

| 

106

| 

101

| 

103  
  
Sept.

| 

I I 0

| 

102

| 

104  
  
Oct.

| 

115

| 

105

| 

109  
  
Nov.

| 

120

| 

I 08

| 

112  
  
Dec.

| 

123

| 

114

| 

114  
  
1920

| | |   
  
Jan.

| 

127

| 

120

| 

119  
  
Feb.

| 

131

| 

127

| 

126  
  
March

| 

133

| 

130

| 

127  
  
April

| 

133

| 

128

| 

129  
  
May

| 

132

| 

128

| 

126  
  
June

| 

140

| 

122

| 

124  
  
July

| 

144

| 

122

| 

123  
  
Aug.

| 

135

| 

120

| 

123  
  
Sept.

| 

137

| 

119

| 

120  
  
Oct.

| 

IJ4

| 

I II

| 

116  
  
Nov.

| 

129

| 

102

| 

I 08  
  
Dec.

| 

125

| 

92

| 

100  
  
From the beginning of the war till July 1919 the Statist and Economist index numbers are in close agreement, except that the Economist shows a more rapid rise for twelve months from Oct. 1916 and less increase in the late autumn of 1917, but there is disagreement as to the dates and amount of the increase after July 1919. At that date the three index numbers agree in' estimating the whole increase in five years at 148, 149 or 150%. The following table shows the divergence in subsequent months:_ TABLE III. Monthly index numbers, July 1919 taken as moo: The earlier agreement is more remarkable than the later discrepancies, for the conditions of accuracy named above were not present during the war when prices were moving rapidly and quotations for the usual qualities of goods were often [[Table Iv]]. - Index numbers of wholesale prices.

| 

United

King-

dom

Statist 

| 

Canada

Official

| 

U.S.A.

Brad;

street's

| 

France

Statist-

ique

Generale

| 

Italy

Bacchi

| 

Japan

Bank of

Japan

| 

Sweden

| 

Nether-

lands

| 

Den-

mark

| 

Norway

| 

Aus-

tralia  
  
---|---|---|---|---|---|---|---|---|---|---|---  
  
Svensk

Handels-

tidning

| 

Official

| 

Finanz

tidende

| 

Okono-

miks

Revue

| 

Official  
  
1913\. .. .

| 

100

| 

100

| 

100

| 

100

| 

100

| 

100

| 

100

| 

I 00

| 

100

| 

\- 

|   
  
1914\. .. .

| 

101

| 

100

| 

97

| 

103

| 

95

| 

951

| 

H 6

| 

106

| 

134

| 

100

| 

TOO  
  
1915\. .. .

| 

126

| 

109

| 

108

| 

1 41

| 

133

| 

97

| 

145

| 

149

| 

149

| 

\- 

| 

141  
  
1916\. .

| 

1592

| 

134

| 

130

| 

190

| 

200

| 

117

| 

185

| 

233

| 

206

| 

\- 

| 

132  
  
1917\. .. .

| 

206

| 

175

| 

1 72

| 

263

| 

306

| 

1482

| 

244

| 

298

| 

284

| 

\- 

| 

146  
  
1918\. .. .

| 

2262

| 

205

| 

204

| 

341

| 

409

| 

196

| 

339

| 

398

| 

292

| 

\- 

| 

170  
  
1919\. .. .

| 

242

| 

216

| 

204

| 

358

| 

366

| 

239

| 

330

| 

306

| 

340

| 

\- 

| 

180  
  
1920

| | | | | | | | | | |   
  
Jan.. .. .

| 

289

| 

248

| 

227

| 

489

| 

504

| 

301

| 

319

| 

293

| 

\- 

| 

334

| 

203  
  
Feb.. .. .

| 

306

| 

2532

| 

226

| 

525

| 

556

| 

314

| 

342

| 

289

| 

\- 

| 

344

| 

206  
  
Mar.... .

| 

308

| 

258

| 

2252

| 

557

| 

619

| 

322

| 

354

| 

290

| 

\- 

| 

351

| 

209  
  
April. .

| 

313

| 

261

| 

226

| 

591

| 

679

| 

301

| 

354

| 

296

| 

\- 

| 

354

| 

217  
  
May. .

| 

306

| 

263

| 

216

| 

553

| 

659

| 

272

| 

361

| 

297

| 

\- 

| 

371

| 

225  
  
June. .

| 

301

| 

258

| 

211

| 

495

| 

615

| 

248

| 

366

| 

297

| 

383

| 

384

| 

233  
  
July. .

| 

2992

| 

256

| 

205

| 

498

| 

613

| 

239

| 

363

| 

301

| 

385

| 

411

| 

234  
  
Aug.... .

| 

298

| 

244

| 

196

| 

504

| 

632

| 

235

| 

365

| 

290

| 

394

| 

418

| 

236  
  
Sept.... .

| 

293

| 

241

| 

184

| 

528

| 

660

| 

231

| 

362

| 

288

| 

398

| 

427

| 

230  
  
Oct.. .. .

| 

282

| 

234

| 

171

| 

504

| 

662

| 

226

| 

346

| 

283

| 

403

| 

422

| 

215  
  
Nov.... .

| 

263

| 

2242

| 

148

| 

463

| 

658

| 

221

| 

331

| 

260

| 

374

| 

404

| 

208  
  
Dec.. .. .

| 

244

| 

214

| 

138

| 

437

| 

634

| 

206

| 

200

| 

233

| 

341

| 

377

| 

197  
  
The prices are of course measured in the currency of each country. In every case there is a fall in the last months of 1920.

unobtainable. It is important to emphasize this uncertainty, for it is the fact that exact measurements of general price changes cannot be made in times of disturbance, and indeed it is difficult even to define the quantity we wish to measure; tendencies can be observed clearly, but only rough measurements can be made and fine comparisons lead to error. The maximum level was reached in March 1920 by the Economist index number, in April by the Statist, in July by the Board of Trade. By Dec. 1920 the Board of Trade index was back at the level of the beginning of 1920, that of the Statist at the level of July 1919, and that of the Economist at the level of May 1919. The difference is mainly due to the varying proportions given to cereals and textiles, which had fallen rapidly, and to meat and minerals which had fallen little in the three numbers.

Table IV. (from the Monthly Bulletin of Statistics of the Supreme Economic Council, vol. ii., No. 5) shows the index numbers for several countries.

(II.) Wholesale Prices of Selected Commodities. - When we come to commodities separately, the measurements can be made more exactly subject to the two following qualifications. During the war period the ordinary sources of supply were so disturbed that pre-war kinds and qualities were no longer in the market (in the Economist index number only 19 out of the 44 quotations included were not subject to some modification of kind); and a statement of prices is generally taken as meaning the price at which a purchaser can obtain the goods he desires and at which a merchant is willing to sell, but in the time of control and rationing these conditions did not obtain, and the price was fixed by other conditions than those which influence a free market.

Table V. is based on the prices tabulated in the Journal of the Royal Statistical Society, July 1920, pp. 640-5, by the editor of the Statist. The index numbers have been recast, the average price in 1913 being taken as Ioo for each commodity; the totals have been obtained by grouping together the separate entries on the same plan as in the original, but the change in base year affects the results, which thus differ from those given in Table II. in the same way as if the weights had been changed.

It is at once evident that the various prices have not followed the same course; the extremes in 1919 are tin, whose price rose only 28% in 6 years, and Russian flax, where the rise is 323%. This great divergence of itself shows that the general index number cannot have great precision; but in the absence of means of improving it, we cannot do better than take this number (shown in the line " Grand Total " in Table V.) as measuring the general inflation of wholesale prices.

The prices as recorded are the resultants of at least five nearly distinct forces, viz. the general inflation of prices, the conditions of supply and demand for the separate commodities, the control of supply, the control of prices, the change of quality. In 1915 [[Table V]]. - Statist index numbers. Averages for each year.

| 

1913 

| 

1915 

| 

1916 

| 

1917 

| 

1918 

| 

1919 

| 

1920  
  
---|---|---|---|---|---|---|---  
  
Vegetable food 

| | | | | | |   
  
Wheat

| | | | | | |   
  
English Gazette

| 

100

| 

170

| 

184

| 

239

| 

229

| 

229

| 

253  
  
American

| 

100

| 

164

| 

185

| 

229

| 

215

| 

205

| 

253  
  
Flour, Town made

white or G.R..

| 

100

| 

1 60

| 

172

| 

192

| 

1 53

| 

1 53

| 

216  
  
Barley, English Ga-

zette .

| 

100

| 

137

| 

189

| 

238

| 

217

| 

2 7 8

| 

330  
  
Oats, English Ga-

zette .

| 

100

| 

162

| 

180

| 

270

| 

258

| 

2 74

| 

301  
  
Maize, American

mixed .

| 

Ioo

| 

1 75

| 

22 3

| 

3 0 4

| 

33 2

| 

334

| 

383  
  
Potatoes, good Eng-

lish.. .

| 

TOO

| 

120

| 

197

| 

2 39

| 

18 3

| 

2 54

| 

311  
  
Rice, Rangoon .

| 

100

| 

162

| 

206

| 

309

| 

320

| 

313

| 

501  
  
Total

| 

100

| 

156

| 

192

| 

252

| 

238

| 

2 55

| 

319  
  
Animal food 

| | | | | | |   
  
Beef: Carcase, Lon-

don Central

meat market.

| | | | | | |   
  
Prime

| 

100

| 

134

| 

150

| 

194

| 

191

| 

200

| 

231  
  
Middling .

| 

100

| 

139

| 

157

| 

206

| 

211

| 

220

| 

257  
  
Mutton: Carcase,

| | | | | | |   
  
London Central

meat market.

| | | | | | |   
  
Prime. .

| 

MO

| 

121

| 

151

| 

185

| 

176

| 

184

| 

233  
  
Middling .

| 

100

| 

126

| 

1 54

| 

1 95

| 

196

| 

203

| 

258  
  
Pork: Carcase,

| | | | | | |   
  
London Central

meat market .

| 

Ioo

| 

129

| 

160

| 

200

| 

2 34

| 

2 33

| 

306  
  
Bacon, Waterford.

| 

100

| 

121

| 

143

| 

192

| 

237

| 

248

| 

311  
  
Butter, Friesland .

| 

Ioo

| 

118

| 

161

| 

181

| 

208

| 

212

| 

253  
  
Total

| 

IOO

| 

127

| 

154

| 

193

| 

208

| 

214

| 

264  
  
Tropical food 

| | | | | | |   
  
Sugar

| | | | | | |   
  
West-Indian* .

| 

100

| 

15

| 

255

| 

33 2

| 

347

| 

404

| 

611  
  
Beet*.. .

| 

100

| 

180 #

| 

2 39 +

| 

26 7 #

| 

2 79

| 

361

| 

689  
  
Java.. .

| 

100

| 

1 7 2

| 

2 44

| 

301

| 

327

| 

400

| 

687  
  
Coffee

| | | | | | |   
  
East India* .

| 

100

| 

97

| 

96

| | 

159

| 

180

| 

183  
  
| 

Ioo

| 

84

| 

94

| 

109

| 

130

| 

215

| 

210  
  
Tea

| | | | | | |   
  
Congou, common*

| | 

167

| 

160

| 

338

| 

418

| 

270

| 

225'  
  
Indian, good me-

diumf .

| | 

127

| 

130

| 

185

| | 

182

| 

114  
  
Average Import*

| 

TOO

| 

122

| 

125

| 

162§

| 

166

| 

171

| 

165  
  
Total*

| 

1 0

| 

143

| 

182

| 

241

| 

269

| | 

432  
  
Total Food

| 

100

| 

143

| 

186

| 

228

| 

233

| 

250

| 

322  
  
| 

1913 

| 

1915 

| 

1916 

| 

1917 

| 

1918 

| 

1919 

| 

1920  
  
---|---|---|---|---|---|---|---  
  
Minerals 

| | | | | | |   
  
Iron

| | | | | | |   
  
Scottish Pig* .

| 

100

| 

109

| 

137

| 

146

| 

154

| 

215

| 

326  
  
Cleveland Pig* .

| 

100

| 

112

| 

142

| 

154

| 

16 3

| 

2 35

| 

357  
  
Common Bars .

| 

100

| 

136

| 

1 77

| 

1 77

| 

181

| 

249

| 

366  
  
Copper

| | | | | | |   
  
Chili Bars. .

English Tough

| 

100

| 

107

| 

170

| 

183

| 

170

| 

1 35

| 

143  
  
Caket. .

| 

100

| 

112

| 

182

| 

185

| 

171

| 

1 35

| 

153  
  
Tin, Straits .

| 

ioo

| 

82

| 

91

| 

118

| 

165

| 

128

| 

150  
  
Lead, English Pig

| 

Ioo

| 

125

| 

170

| 

169

| 

169

| 

1 54

| 

209  
  
Coal

| | | | | | |   
  
Wallsend in Lon-

don .

| 

Ioo

| 

143§

| 

128§

| 

128§

| 

156

| 

211

| 

149  
  
Newcastle Steam t

| 

TOO

| 

136

| 

266

| 

194

| 

216

| 

2 93

| 

332  
  
Average Export

| 

100

| 

122

| 

177

| 

193

| 

219

| 

33 1

| 

572  
  
Total

| 

100

| 

118

| 

150

| 

1 60

| 

174

| 

205

| 

276  
  
Textiles 

| | | | | | |   
  
Cotton

| | | | | | |   
  
Middling Ameri-

can.. .

| 

TOO

| 

84

| 

128

| 

236

| 

318

| 

280

| 

330  
  
Fair Dhollerah .

| 

100

| 

77 

| 

123

| 

240

| 

301

| 

259

| 

248  
  
Flax

| | | | | | |   
  
Petrograd* .

| 

Ioo

| 

176

| 

226

| 

333

| 

353 4

| 

353 a

| 

353a  
  
Russian, Average

| | | | | | |   
  
Import* .

| 

ioo

| 

161

| 

207

| 

3 68 §

| 

379

| 

4 2 3

| 

837  
  
Hemp

| | | | | | |   
  
Manila, Fair rop-

ing*

| 

Ioo

| 

120

| 

172

| 

266

| 

313

| 

185

| 

207  
  
Petrograd, clean*

| 

Ioo

| 

159

| 

18 7

| 

2 7 8

| 

439

| 

3 88

| 

385  
  
Jute, good medium

| 

ioo

| 

80

| 

117

| 

149

| 

148

| 

189

| 

169  
  
Wool

| | | | | | |   
  
Merino, Port

| | | | | | |   
  
Philip*. .

| 

Ioo

| 

119

| 

182

| 

258

| 

262

| 

37 2

| 

444  
  
Merino, Adelaide*

| 

Ioo

| 

114

| 

174

| 

2 45

| 

2 47

| 

33 8

| 

337  
  
English, Lincoln

half-hogs .

| 

Ioo

| 

140

| 

162

| 

169

| 

152

| 

183

| 

178  
  
Silk, Tsatlee. .

| 

Ioo

| 

89

| 

148

| 

1 95

| 

2 34

| 

2 3 6

| 

351  
  
Total

| 

100

| 

I12

| 

156

| 

214

| 

269

| 

272

| 

320  
  
Miscellaneous 

| | | | | | |   
  
Hides

| | | | | | |   
  
River Plate, dry*

| 

100

| 

105

| 

119

| 

162

| 

163

| 

182

| 

166  
  
River Plate,

salted*

| 

Ioo

| 

116

| 

139

| 

167

| 

149

| 

206

| 

192  
  
Average Import

price*. .

| 

Ioo

| 

116

| 

135

| 

180

| 

185

| 

198

| 

233  
  
Leather

| | | | | | |   
  
Dressing hides*

| 

Ioo

| 

1 47

| 

1 45

| 

179

| 

168

| 

187

| 

223  
  
Average import

price*. .

| 

Ioo

| 

113

| 

140

| 

179

| 

170

| 

21I

| 

370  
  
Tallow, town. .

| 

Ioo

| 

108

| 

138

| 

181

| 

242

| 

255

| 

218  
  
Oil

| | | | | | |   
  
Palm.. .

| 

TOO

| 

98

| 

126

| 

130

| 

127

| 

197

| 

198  
  
Olive.. .

| 

Ioo

| 

104

| 

120

| 

2 34

| 

4 00

| 

404'

| 

404a  
  
Linseed* .

| 

TOO

| 

122

| 

167

| 

228

| 

2 57

| 

375

| 

356  
  
Linseed*

| 

Ioo

| 

126

| 

176

| 

247

| 

288

| 

306

| 

345  
  
Petroleum, refined

| 

100

| 

105

| 

141

| 

190

| 

252

| 

204

| 

298  
  
Soda, crystals .

| 

100

| 

102

| 

166

| 

189

| 

1 74

| 

2 49

| 

317  
  
Nitrate of Soda .

| 

100

| 

II()

| 

156

| 

217

| 

237

| 

216

| 

215  
  
Indigo, Bengal .

| 

Ioo

| 

486

| 

486

| 

373

| 

3 2 7

| 

33 2

| 

527  
  
Timber. .

| | | | | | |   
  
Hewn, average

import*. .

| 

Ioo

| 

147

| 

205

| 

244

| 

268

| 

344

| 

400  
  
Sawn, average

import*. .

| 

Ioo

| 

150

| 

2 3 6

| 

333

| 

43 0

| 

3 6 9

| 

416  
  
Total

| 

'00

| 

148

| 

182

| 

217

| 

247

| 

268

| 

312  
  
Total Materials .

| 

Ioo

| 

129

| 

165

| 

201 

| 

234

| 

2 5 2

| 

304  
  
Grand Total. .

| | 

135

| 

170

| 

212

| 

234

| 

251

| 

312  
  
Silveri-

| | 

86

| 

114

| 

151

| 

172

| 

, 207

| 

223  
  
[[Table V]]. - Continued.  *The entries in these cases of similar commodities are averaged before inclusion in the index numbers.

tThese commodities are not included in the Statist index numbers. $Comparative values.

§Approximate prices. a Nominal prices.

and 1916 the principal increases may be traced to the diminution or difficulty of supply (cereals, sugar, flax) or to acuteness of demand (wool) or to both (timber). In 1 9 17-8 the prices of nearly all commodities whose supply was threatened or for which the demand was increased were controlled. The quality was changed definitely in the case of flour and indirectly when the prices are averages of several grades as in the cases of meat, flax, leather and timber..

## Food

The price of wheat rose immediately after the beginning of the war, and with it the prices of flour, oats, maize and rice. The prices were checked by the establishment of a government system of purchase at the end of 1916 and by the control of the prices of home-grown cereals in 1917; with this system flour of mixed materials was substituted for wheat-flour and the product sold at a price kept constant and relatively low, by the help of a subsidy beginning in the autumn of 1917. In the case of wheat and flour the subsidy and control continued till the beginning of 1921 but the prices rose; the prices of other cereals increased very rapidly from the autumn of 1919. An attempt was made to control the consumption of oats in 1917-8, otherwise cereals were not rationed. The wholesale price of potatoes was fixed from time to time, the Government undertaking to make good growers' losses, but the price was changed so frequently that the control had little effect.

Early in the war the price of imported meat increased more rapidly than that of home-killed, till in 1917 there was little difference between their retail prices. On the whole the price of meat increased less than that of commodities in general. Prices were fixed in Aug. 1917 and consumption was rationed early in 1918; after the Armistice control was gradually relaxed; but prices of beef and mutton changed very little during the two years after the first fixing of them. The prices of Irish bacon quoted are hardly typical; in 1917 a great quantity of American bacon of inferior quality was bought by the Government, who had difficulty in selling it at a price which covered the cost. The demand for high-class bacon could not be met, and its price after 1917 rose more rapidly than that of butcher's meat. The line in the table relating to imported butter is perhaps misleading since the supply was insignificant, and its inclusion unduly depresses the average; for the records of milk and its products we must depend on retail prices. Taken together the prices of animal food increased at a lower rate than the general average of prices except in 1916-7.

The price of sugar was of course dominated by the cutting off of the continental supply, and its increase was greater than that of any commodity always obtainable included in the table. The Government took over the whole supply at the beginning of the war and issued it at a fixed price; the control continued till 1921. There was no shortage of supply of coffee nor of tea (except in the autumn of 1917), and their prices rose relatively little.

When all food prices are grouped together as in the table, it is seen that they rose till 1917 more rapidly than the average for materials, but that the increase from 1913 to 1918, and to 1919 was the same in the two groups.

## Materials

The prices of different kinds of coal increased at different rates prior to the general control of coal mines which took effect early in 1917; with the stoppage of export of coal the supply was adequate even for the increased use in the manufacture of pig-iron, and the restriction in consumption from 1917 was only necessary to economize labour in the mines. For domestic and manufacturing use the price rose but slowly till 1919 and generally less than for goods in general. Iron and steel began to come under control as early as June 1915 with the initiation of the Ministry of Munitions, and their use was severely restricted for all civil purposes, so that there was no free market for more than three years. The prices were actually fixed in Nov. 1917, a government subsidy being given to steel and to pig-iron makers to meet any extra costs. The subsidies were withdrawn early in 1919 and the price of pig-iron rose from L4 15s. to 8 a ton, the pre-war level having been L2 I Is. Reconstruction and repairs, for many years in arrear, caused a great demand for iron and steel, and in July 1920 pig-iron was 320% and steel rails were 283% dearer than in 1914; prices fell slowly in the autumn of 1920 (Birkett: " Iron & Steel Trades during the War," Statistical Journal, May 1920). Copper, tin and lead showed no special inflation and were relatively cheap in 1919.

Cotton followed an exceptional course. With the cutting off of Germany from the market the price fell considerably in the first months of the war and was below the pre-war level till nearly the end of 1915. Presumably in consequence of the restriction of shipping, a rapid rise began in the autumn of 1916, and at the date of the Armistice cotton was at three times its pre-war price; then there was a perceptible fall for some months, but this was followed by a great increase, the reason of which has not been explained, which brought American cotton early in 1920 to more than four times its cost in July 1914; the reaction from this inflation gave the first indication in 1920 that the general index number was about to move downwards. Both yarn and piece goods rose more rapidly than raw cotton, especially in 1919-20.

The price of wool also fell after the outbreak of war, but the great demand for the Allied armies soon turned the scale and English wool especially became rapidly dearer in 1915. From June 1916 the Government took steps to assume ownership of all the wool it required and to control the rest; the distribution to manufacturers and prices was arranged by an intricate system involving the Government, wool-brokers and manufacturers (Zimmern: Economic Journal, March 1918). The price was very high in 1917-8 and rose rapidly in 1919 when the civilian demand for replenishing their wardrobes and households was acute, and the prices of yarn and manufactured goods outpaced even raw materials. There was no definite fall till 1920. As regards flax, the cutting off of the Russian supply and the Government demand for linen in airships caused linen to be practically unobtainable by civilians, and the shortage naturally continued long after the war. Jute and silk were less affected.

The variations in the movements shown under the heading " Miscellaneous " can in general be explained by known conditions of supply and demand. The supply of petroleum proved to be sufficient for war needs. The Statist index number is vitiated by the exclusion of rubber. Owing to the development of plantations before the war the supply was even excessive; the price was rarely more than 20% higher than in July 1914 and after the Armistice was lower.

(III.) Retail Prices of Food in the United Kingdom. - Accurate and useful statements of retail prices are in general only obtainable with respect to food, in part because most attention has been directed to recurrent and necessary domestic expenditure, in part because it is less easy to define the unit of purchase in the case of clothes and manufactured goods. The cost of other necessary items of expenditure is considered in the article Cost Of Living, and this section deals with food alone.

The following tables show the average prices paid by the working classes in the United Kingdom, the result of the monthly collection of information by the Ministry of Labour (formerly by the Board of Trade) published in each issue of the Labour Gazette, and described in detail in the issue of March 1920. The general movement in retail prices was similar to that of wholesale, that is, a nearly regular increase (23% cumulatively per annum) took place for three years after the outbreak of war, then for more than a year the rise was checked by control and rationing; there was a temporary fall in the spring of 1919, followed by a rise which became rapid in the summer and autumn of 1920 and a fall after Nov. 1920.

| 

1914

| 

1915

| 

1916

| 

1917

| 

1918

| 

1919

| 

1920

| 

1921  
  
---|---|---|---|---|---|---|---|---  
  
January. .

| 

\- 

| 

118

| 

145

| 

187

| 

206

| 

230

| 

236

| 

278  
  
February. .

| 

\- 

| 

122

| 

147

| 

189

| 

208

| 

230

| 

235

| 

263  
  
March .

| 

\- 

| 

124

| 

148

| 

192

| 

207

| 

220

| 

2 33

| 

249  
  
April .

| 

\- 

| 

124

| 

1 49

| 

1 94

| 

206

| 

213

| 

235

| 

238  
  
May. .. .

| 

\- 

| 

126

| 

155

| 

198

| 

207

| 

207

| 

246

| 

232  
  
June. ... .

| 

\- 

| 

132

| 

159

| 

202

| 

208

| 

204

| 

255

| 

218  
  
July. ... .

| 

100

| 

1321

| 

161

| 

204

| 

210

| 

209

| 

258

| 

220  
  
August .

| 

\- 

| 

134

| 

160

| 

202

| 

218

| 

217

| 

262

| 

\-   
  
September. .

| 

II()

| 

135

| 

165

| 

206

| 

216

| 

216

| 

267

| 

\-   
  
October.. .

| 

112

| 

140

| 

168

| 

197

| 

229

| 

222

| 

270

| 

\-   
  
November. .

| 

113

| 

141

| 

178

| 

206

| 

233

| 

231

| 

291

| 

\-   
  
December. .

| 

116

| 

144

| 

184

| 

205

| 

229

| 

234

| 

282

| 

\-   
  
Average for year

| 

\- 

| 

131

| 

160

| 

198

| 

215

| 

219

| 

256

| 

\-   
  
Wholesale food index*

(Statist 

| 

\- 

| 

142 

| 

173 

| 

22 5 

| 

2 3 1 

| 

2 45 

| 

30 8 

| 

\-   
  
TABLE VII. - Average of Retail Food Price-Changes in the United Kingdom as computed in the Labour Gazette.  (The average on the 1st or 2nd of each month is expressed as a percentage of the average in July 1914.) *Second quarter of 1914 taken as loo.

Table VII. shows the average of the movements as combined from the data in Table VI. (together with the prices of fish and eggs) by the Ministry of Labour, each item being given the importance estimated from a pre-war standard budget of expenditure. For the relation of this computation to the cost of living see Cost Of Living. Except for making facile generalizations the detailed table is more important than the summary.

The price of bread rose intermittently, but on the whole rapidly till Sept. 1917, when its price was exactly double that of July 1914. The rate of extraction of flour from grain was controlled from the autumn of 1916, and government regulation flour containing an admixture of wheat, maize, rice and other cereals in varying proportions alone was used in the three years 1917-8-9, and during this period the price is not that of a commodity of constant quality. In Sept. 1917 the Government fixed the price at 9d. for the 4-lb. loaf, became the sole purchasers of the necessary cereals, regulated the price to millers and bakers and met the deficit by a subsidy. The price was raised to Sid. in Sept. 1919 to meet bakers' increased expenses, and at subsequent dates again raised with the increasing price of wheat till it reached is. 4d.; when wheat fell in the latter part of 1920 the subsidy was gradually reduced to zero and the price of bread maintained; in 1921 the price fell, and was Is. 'Id. from April to July. Flour followed nearly the same course as bread.

| 

1914

July Dec.

| 

1915

June Dec.

| 

1916

June Dec.

| 

1917

June Dec.

| 

1918

June Dec.

| 

1919

June Dec.

| 

1920

June Dec.

| 

1921

June  
  
---|---|---|---|---|---|---|---|---  
| 

s. d.

| 

s. d.

| 

s. d.

| 

s. d.

| 

s. d.

| 

s. d

| 

s. d.

| 

s. d.

| 

s. d. s. d.

| 

s. d.

| 

s d.

| 

s. d.

| 

s. d.

| 

s. d.  
  
Bread. 4 lb.

| 

54

| 

62

| 

8

| 

8

| 

84

| 

10

| 

III

| 

9

| 

9

| 

9

| | 

9

| 

92

| 

I 02

| 

I 4

| 

1 II  
  
Flour. lb.

| 

102

| 

I 0

| 

I 3

| 

I 34

| 

I 42

| 

I 72

| 

I IO

| 

I 4

| 

I 4

| 

I 4

| 

I

| 

4

| 

I 4

| 

I II

| 

2 64

| 

2 04  
  
Beef

British lb.

Imported lb.

| 

8

6

| 

3?

84

1

74

| 

3

I14

9

| 

3

114

1

94 

| 

3

I I .

1

I 14

II I

| 

3

I I 4

| 

1

I 42

3

I I 4

| 

1

I 3z

1

I I z

| 

1

I 32

1

I 3 2

| 

1

1 52

1

I 5z

| 

I

I

| 

1

32

1

I Z

| 

I 6

3

I 24

| 

i 6

3

I 0 4

| 

I 9

3

I 0 4

| 

3

8,

I O  
  
Mutton

| | | | | | | | | | | | | | | |   
  
British lb.

| 

84

| 

81

| 

104

| 

II

| 

I II

| 

I 14

| 

I 52

| 

I 3

| 

I 3

| 

I 44

| 

I

| 

34

| 

I 54

| 

I 54

| 

I II

| 

I IO  
  
Imported lb.

| 

52

| 

61

| 

8

| 

84

| 

114

| 

II

| 

I 2

| 

I I I

| 

I 3

| 

I 54

| 

I

| 

I

| 

I O

| 

IO 2

| 

I 14

| 

II  
  
Bacon lb.

| 

III

| 

1 o

| 

I 14

| 

I 24

| 

I 3 2

| 

I 51

| 

1 84

| 

2 24

| 

2 3

| 

2 3

| 

2

| 

3

| 

2 42

| 

2 6

| 

2 94

| 

2 21  
  
Milk. qt.

| 

32

| 

32

| 

34

| 

42

| 

42

| 

54

| 

52

| 

64

| 

52

| 

82

| | 

62

| 

104

| 

74

| 

104

| 

74  
  
Cheese

| | | | | | | | | | | | | | | |   
  
Imported lb.

| 

84

| 

92

| 

114

| 

I14 

| 

I 14

| 

I 22

| 

I 72

| 

I 44

| 

1 5

| 

1 8

| 

I

| 

6

| 

I 6

| 

1 8 1

| 

I 9

| 

I 72  
  
Butter. lb.

| 

I 24

| 

I 32

| 

I 41

| 

I 7

| 

I 7

| 

2 0

| 

2 0

| 

2 42

| 

2 52

| 

2 6

| 

2

| 

6

| 

2 64

| 

2 III

| 

3 34

| 

2 2  
  
M argarine lb.

| 

74

| 

74

| 

74

| 

7 2

| 

84

| 

84

| 

114

| 

112

| 

I o

| 

1 0

| | 

I14

| 

I I

| 

I 2

| 

I 14

| 

9  
  
Sugar. lb.

| 

2

| 

3 a

| 

3 2

| 

4

| 

54

| 

52

| 

54

| 

6

| 

7

| 

7

| | 

7

| 

8

| 

I 2

| 

Io

| 

I 74  
  
Potatoes lb.

7

| 

a

44

| 

4

| 

3

44

| 

1

42 

| 

. 1

2

| 

1 O 1

4

| 

Iii

r

| 

63

4

| 

1

72

| 

1

74

| | 

81

4

| 

101

2

| 

I 1

34

| 

I11

2

| 

83

4  
  
Tea. lb.

| 

I 62

| 

I 84

| 

I II

| | 

2 34

| 

2 34

| 

2 8

| 

3 11

| 

2 8

| 

2 8

| 

2

| 

64

| 

94

| 

2 104

| 

2 84

| 

2 62  
  
The retail prices of meat were determined by the wholesale prices already discussed. Imported meat remained for three and a half TABLE VI. - Average Retail Prices in the United Kingdom of the Principal Foods as recorded* at the beginning of each month in the Labour Gazette.  *The prices from Dec. 1914 to Dec. 1918 are calculated from the percentage changes recorded.

## NoTEs

The prices of meat are the means between two entries in each case and not the average prices of the carcases. They shoul only be used for comparative purposes, and not taken to be the average price of all meat bought.

In general the records are the average for the commodities as bought in shops and stores used by the working class.

years at 2d. or 3d. a lb. lower than British meat, but since the price of the latter was nearly doubled, the percentage increase of the former was much greater. The Ministry of Food fixed wholesale prices and the retailer's margin in September 1917 and subsequently the distinction in price between British and imported meat was removed. Rationing was gradually introduced, and was nearly universal from April 1918 to May 1919. Purchasers were restricted also to the kind of meat that was available from time to time. During the period of control and till the summer of 1920 prices fluctuated little, but after control was removed imported meat became cheaper than British, and with a rise in the latter in 1920 the pre-war proportion between the two was nearly restored. Home meat was at its maximum (at about two and a half times its pre-war level) in the autumn of 1920 and did not fall at all considerably till after May 1921.

Prior to 1914 the corresponding numbers, for London only, are 1910 and 1911 98, 1912 and 1913 103. (See article Cost Of Living for further analysis, and for comparative figures for other countries.) The price of bacon rose rather more slowly in the opening years of the war, but rapidly in the summer of 1917 till it was 140 °A the pre-war price. In Nov. 1917 importers' and dealers' prices were fixed, and in July 1918 the regulations extended to retail prices; during this period large supplies of generally inferior bacon were received from America, and rationing was only necessary for a few months. The price after being stationary for two years rose during 1920 till it reached three times the level of July 1914.

After 1915 the price of milk was markedly seasonal, while before the war it was generally retailed at the same price nearly all the year round. No change took place till the autumn of 1915, when the price rose id. a qt., and in the following autumn another id., and in neither case was there a fall in the spring; in the autumn of 1917 it reached nearly twice the pre-war price, and in subsequent years fell in the spring and rose in the winter to successively higher points, the maximum (fold.) being reached in Jan. 1920. Maximum prices were in force from the autumn of 1917 till Jan. 1920, but they were not reached in all localities. The great rise in the price of milk must be attributed to the high cost of cattle food, which was very scarce in the period of restricted imports; elaborate arrangements were made to increase the supply by curtailing the consumption of cream and the manufacture of butter and cheese. Milk was not rationed except by informal local arrangements. Not much attention should be paid to the prices of butter and cheese after 1916, since during a long period they were not freely obtainable, and the Government having taken control distributed them at prices which would meet their cost. Butter was rationed with margarine.

The price of margarine rose little till 1917, while its consumption increased greatly owing to the want of butter. A shortage of supply was felt suddenly at Christmas 1917, and the Ministry of Food took control and presently assumed ownership of the supply of its constituents and the factories in which it was made. The quality was greatly improved, as compared with that in 1914, and it.:; importance as food became very great in view of the difficulty of obtaining sufficient fatty substances from other sources. The price was fixed in Nov. 1917 at Is. (Is. 4d. for oleomargarine) and changed little till the end of 1920. In May 1919 the price was left free.

The whole supply and distribution of sugar was taken over by the Government at the beginning of the war and control was continued till 1921. Sugar was distributed through the ordinary channels in such amounts as were available and traders began early to ration their customers. Official rationing (generally at 8 oz. per person) developed in 1917 and its success encouraged the Government to develop the general scheme of rationing meat, fats and some other foods in 1918; rationing of sugar gradually became obsolescent in 1919. The price rose consi lerably at irregular intervals as shown in the table till in Jan. 1920 it was seven times as dear as before the war.

Potatoes became dear after 1916 and afterwards fluctuated strongly upwards in sympathy with other agricultural produce and the prise of manures, and in relation to the supply of each season. The high prices, however, were not universally felt owing to the development of the cultivation of private allotments especially early in 1918.

The supply of tea was ample except for a short period in the autumn of 1917. At that date the Government took control of the supplies and provided a uniform blend to be retailed at 2s. 8d. per lb. The rise in price was less on the whole than that of any other commodity shown in the table.

Other less important foods often showed a greater increase in price than those already named, especially since there was a run on them during the time of restriction and shipping facilities were given rather to the more necessary imports. Eggs in particular became scarce and dear owing to the failure of the European supply and the scarcity of poultry food.

No general comparison of wholesale and retail prices is possible, for want of adequate records of the wholesale prices of manufactured goods and of retail prices of articles other than food. In the case of food, however, the figures are sufficiently typical and accurate to allow of a general comparison, but not to permit accurate detailed measurements. The two index numbers shown depend on nearly the same range of foods, but the bread subsidy lowers the retail prices by about 10 points in 1918-20.

Year

| 

Quarters

| 

Wholesale

(Statist) 

| 

Retail

(Labour Gazette)   
  
---|---|---|---  
  
1914\. .

| 

1st &2nd'

| 

100

| 

100  
  
| 

4th

| 

118

| 

116  
  
1915\. .

| 

1st

| 

134

| 

123  
  
| 

2nd

| 

144

| 

130  
  
| 

3rd

| 

142

| 

136  
  
| 

4th

| 

144

| 

143  
  
1916\. .

| 

1st

| 

159

| 

.

148  
  
| 

2nd

| 

173

| 

158  
  
| 

3rd

| 

169

| 

164  
  
| 

4th

| 

195

| 

183  
  
1917\. .

| 

Ist

| 

218

| 

192  
  
| 

2nd

| 

232

| 

201  
  
| 

3rd

| 

221

| 

203  
  
| 

4th

| 

222

| 

206  
  
1918\. .

| 

1st

| 

230

| 

207  
  
| 

2nd

| 

227

| 

208  
  
| 

3rd

| 

234

| 

221  
  
| 

4th

| 

247

| 

231  
  
1919\. .

| 

1st

| 

236

| 

221  
  
| 

2nd

| 

233

| 

207  
  
| 

3rd

| 

244

| 

218  
  
| 

4th

| 

264

| 

234  
  
1920\. .

| 

1st

| 

292

| 

234  
  
| 

2nd

| 

328

| 

253  
  
| 

3rd

| 

326

| 

268  
  
| 

4th

| 

290

| 

284  
  
1921 .

| 

1st

| 

246

| 

230  
  
TABLE VIII. Wholesale and retail prices of food. (Statist and Labour Gazette index numbers.) *July 1914 for retail prices.

In Table VIII. the retail prices for the first quarter of each year are the averages for the 1st of Feb., March, April and so throughout the year. Wholesale and retail prices include those of controlled goods, and in the case of wheat, flour and bread are affected by the bread subsidy. The table shows that retail prices rose in sympathy with wholesale prices during the first three years of the war, but the rise on the whole was less, and the accelerated rise in the spring of each year was only marked in wholesale prices. As prices became more and more rigidly controlled in 1917, and some commodities were rationed in 1918, wholesale prices fell or remained nearly stationary, while retail prices rose very slowly.

(A. L. Bo.)