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WAR BORROWING

commodities ” movement was restrained. But as
compared with the effect of the earlier price fixing
the difference is marked.

There is thus some evidence to support the hypo-
thesis that, just as the effective price fixture of basic
materials may have retarded the rise in commodity
prices in the first half of our war financing, so the
increase in the prices of fabricated goods in con-
sequence of unattempted or ineffective price fixture
may have contributed to the rise of the index-num-
ber of commodity prices in the second half. In-
deed, it has even been suggested that an increase in
the volume of currency might be expected to make
its presence felt, even in face of a group of price
fixed commodities, by “ a geyser-like ebullition ”
with respect to the prices of general commodities
not so controlled. Until however the detailed study
of the effect of price fixing on prices now in process
in the Price Section of the Division of Planning and
Statistics of the War Industries Board shall have
been completed, any final conclusion upon this mat-
ter is impossible.

It remains to inquire whether the Treasury’s oper-
ations have been directly productive of that abnor-
mal increase in the circulating medium — credit and
currency — which might be counted upon to cause
a rise in general prices. Specifically this may be
phrased as the query: Have the issue and use of
certificates of indebtedness been the direct cause of
an extraordinary expansion of credit or increase in
currency ?

The absolute theory of short-term borrowing in