176

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  hypothesis ­
  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  consequence ­
  of  unattempted  or  ineffective  price  fixture
may  have  contributed  to  the  rise  of  the  index-number ­
  of  commodity  prices  in  the  second  half.  Indeed, ­
  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  matter ­
  is  impossible.
It  remains  to  inquire  whether  the  Treasury’s  operations ­
  have  been  directly  productive  of  that  abnormal ­
  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