﻿THE PRICE LEVEL

167

September, 1918) prices rose — on the whole, with
but slight arrest and with respect to the entire in-
terval with considerable precipitancy. As to retail
prices, the stable period began later (October,
1917) and continued later (April, 1918).

The facts that we are accordingly called upon to
interpret are that in so far as reliance is to be put
upon the validity of the Bureau of Labor index
number, (1) commodity prices remained relatively
stable during something less than the first half of
our war borrowing period and (2) such prices ad-
vanced sharply during something more than the
second half. Phrased somewhat differently, prices
did not rise in the seven months from the first issue
of certificates in anticipation of the First Liberty
Loan to the resumption of certificate borrowing in
anticipation of the Third Liberty Loan; and on the
other hand, prices did rise materially in the succeed-
ing nine months from such resumption through the
certificate borrowing in anticipation of the Fourth
Liberty Loan.9

(1) It would be unwarranted to draw any con-
clusion as to the effect of war borrowing upon gen-
eral prices from the failure of prices to advance in
the seven months within which occurred the ten cer-
tificate issues in anticipation of the First and Second
Liberty Loans, as well as the actual flotation of the
Loans. It is generally agreed that such an advance
may be expected — other things remaining un-
changed — to follow any large increase in the supply
of money and credit. But even among the strictest
adherents of the quantity theory of money, there is

9	See p. 60 above.