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  necessity ­
  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  industry, ­
  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  invalidate ­
  the  reliability  of  the  index  number  as  typical ­
  of  the  general  price-movement  and  thus  to  obscure ­
  the  price-changing  effect  of  alteration  in  any
of  the  magnitudes  that  enter  into  the  equation  of  exchange. ­
  If  the  proportion  of  price-fixed  commodities ­
  in  the  index-number  table  is  relatively  greater
in  number  or  weight  than  the  proportion  of  pricefixed
  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 ­