﻿THE PRICE LEVEL

171

President and delegated by him to the Food and Fuel
Administrations, the prices of basic foods and of
coal fell under regulation at the close of August,

1917.	By presidential proclamation on August 23,
19x7, the price of bituminous coal was fixed, and by
a similar proclamation issued August 30, 1917, the
price of wheat was regulated. With the increase in
the military program and a corresponding increase
in the volume of government purchases, the neces-
sity of a more general control of prices soon became
apparent. From September, 1917, to the summer
of 1918, the list of price-controlled commodities was
extended to include most of the basic materials of in-
dustry, with the exception of raw cotton. The
prices of copper and iron and steel were fixed in
September, 1917; wood chemicals and timbers in
December; zinc in February, 1918; aluminum in
March; rubber, hides and skins, and wool in May.

The presence of price-fixed commodities among
the index number commodities obviously tends to in-
validate the reliability of the index number as typi-
cal of the general price-movement and thus to ob-
scure the price-changing effect of alteration in any
of the magnitudes that enter into the equation of ex-
change. If the proportion of price-fixed commod-
ities in the index-number table is relatively greater
in number or weight than the proportion of price-
fixed commodities relative to all commodities, the
index-number will show a smaller rise than general
prices have suffered.

The influence of price fixing upon the movement
of commodity prices has recently been studied by
the Price Section, Division of Planning and Sta-