Ralph Henry Hess

“ But it is quite possible that aggregates and averages may remain unchanged while a radical readjustment of incomes and costs is effected among individuals or among the differently circumstanced groups which compose the social organism. Indeed, it is quite plain that a readjustment of respective shares in the distribution of the total income among the different classes of the population is the raison d'être of present economic discontent, and a careful analysis of the apportionment of the "national dividend" affords a key to the current problems of living costs. ”

“ Collectively and individually, we are living better than ever before. We are working shorter hours, occupying better homes and cleaner cities, wearing better clothing, eating better food and being better educated—not only is this true of the wealthy and well-to-do, but of the poor and the indigent as well. But this rational form of "consuming-power" should not be confused with improvidence, or what has been associated in some minds with the alleged engulfing "cost of high living." ”

“ If the industrial, commercial and leisure classes of the population are collectively considered, total income and aggregate prices are subject to similar concurrent changes. It is a truism, often overlooked, that the sum of prices paid constitutes the total of wages, interest, rents and profits which compose the money-income of society and, per se, the direct means of acquiring the necessities and comforts of life. The measuring and estimating of changes in the cost of living, therefore, is resolved into a comparative study of incomes and expenditures. ”

“ Eational standards of living are justified by coextensive industrial efficiency. Progressive well-being tends to affect consumption and production in direct proportion; indeed, the stimulus to increased production normally exceeds the desire to spend, and no lasting influence towards advancing prices or costs results. If, however, expenditures are permitted to infringe upon the capital of the country, or of any particular group of the population, or even upon the rate of accumulation of savings, the effect on prices and costs will be immediate. ”

“ Since all buy in the same market, a part of the population possesses an increased proportion of cash to the prices which must be paid, and the exchequers of the less fortunate are inversely affected. In other words, persons identified with one economic class may experience an actual decrease in their cost of living, despite rising prices, while others must carry an increased burden, and, possibly, a third group may be affected not at all. ”

“ The Malthusian principle is inexorable, and when population threatens to overrun the natural springs of subsistence, the normal resultant is a scale of high prices and the exaction of excessive industrial costs in exchange for the means of living. Whatever may be the present relation of population to productivity in the United States, the cosmopolitan nature of modern trade and the fact that other countries have amassed populations in excess of their means to provide an average of comfortable living, have potential significance in problems of costs and subsistence. ”

“ In this very dynamic aspect of modern life, one observes a tremendous increase in demand for the costly and enervating indulgencies of conspicuous expenditure and a more than proportionate decrease in the productive powers which contribute to the synchronous supply of the staples of life. Here, indeed, resides a fundamental problem in national cost accounting. ”

“ Price changes, which may be traced to an increased gold supply and the consequent depreciation of the dollar, react upon the cost of living only as certain reciprocal advantages and disadvantages are shifted among persons whose money incomes rest upon actual or implied contractural relations extending over the period of price change. For this reason, advancing prices are peculiarly advantageous to the debtor class, composed mainly of bonded business corporations, virtually discounting their obligations at an annual rate commensurate with the increase in prices. ”

“ The consequent shifting of the incidence of industrial returns may be ascertained by enumerating the respective beneficiaries and exploitees of the profit-taking process—the trade advantages of the one class measure the economic disability of the other class; and the attenuation of the incomes of the less favored, as a means to augment the profits of the more favored, is a significant attribute of changing social costs. ”

“ Space forbids an analytic treatment of the factors which have contributed to the unusual price movement of the last twelve years; they include such industrial and social phenomena as have affected the relative supply of and demand for the standard metal, on the one hand, and the supply of and demand for the things which make up a living on the other. ”

“ Although price and cost may, in conventional phrasing, be interchangeable without confusion of ideas, the discussion of changing commodity prices and concurrent costs of living necessitates a discriminating use of the terms. As a matter of fact, an increase in the average of prices may be no proof of change in the average cost of living during the same period ”

“ Economically considered, America has, until recently, been thoroughly democratic; that is to say, despite tendencies to social class and caste, the population has shared without essential discrimination in industry and production. ”

“ To avoid the popular error of attributing an increased cost of living to all persons under a regime of rising prices, and to reveal the actual effect of prices on costs, it is necessary to determine whether the majority of the population is included among those whose incomes have failed to respond to advanced charges or among the beneficiaries of high prices. ”

“ If an increased proportion of the social income finds its way into the pockets of fortunate individuals and favored classes of society, other persons and groups must suffer a relative decrease in purchasing power. ”

“ In the more fortunate class, whose incomes bear a progressive ratio to prices and whose cost changes are, therefore, inversely proportional to price movements, we may expect to find: (1) proprietors of mortgaged and bond-issuing commercial and industrial enterprises; (2) proprietors of highly capitalized and centralized industries not subject to public control; (3) employers of unorganized labor and salaried persons ”

“ By the grace of strategic advantages of occupation and centralization, persons deriving incomes through proprietorship in relatively highly organized and capitalized industry are the recipients of differential gains which tend always to transcend price increments. Such persons are secure in the realization of a progressive ratio of purchasing power to prices. ”

“ It makes little difference whether the differential advantage of centralization is of the nature of special privilege or superior efficiency of organization. In either case, industrial rivalry is forced from the field and, in the absence of official restraint, the exaction of monopoly charges is inevitable. ”

“ The passing of the millionaire captains of exploitation and industry is imminent, and there is no more disconcerting contingency in the nation's future than the probable succession of a less hardy and energetic generation to their proprietary trusteeship of the country's wealth. ”

“ Wage earners and salaried persons are subject to a like disadvantage. Wage and salary scales are not readily readjusted and, especially, in their upward movements, show a considerable "lag" behind prices. Because of the prevalence of a customary charge for many forms of professional service, such professions as medicine, dentistry and law may fail to command an increase in income sufficient to keep pace with advancing prices. ”

“ This neutral condition may be attributed to those whose incomes and expenditures are alike correlated with current prices, and is doubtless realized by a much larger proportion of the population than may at first appear. Many persons are so identified in their business interests with both characteristic groups as to realize no net change as a result of the advantage of either. ”