THE  PRICE  LEVEL

167

September,  1918)  prices  rose  —  on  the  whole,  with
but  slight  arrest  and  with  respect  to  the  entire  interval ­
  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  advanced ­
  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  succeeding ­
  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  conclusion ­
  as  to  the  effect  of  war  borrowing  upon  general ­
  prices  from  the  failure  of  prices  to  advance  in
the  seven  months  within  which  occurred  the  ten  certificate ­
  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  unchanged ­
  —  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.