Senator FLANDERS. Would it not be better to match the ends of the wars instead of the beginnings of the wars? Mr. CLAGUE. I realize that because of the different lengths of the wars it is not too easy to interpret this comparison. This chart is one that we started back at the beginning of the war when we did not know how long it was going to last. In general, you will see that in a good many cases-metals, textiles, fuel, and farm prices to a lesser extent-prices in this war did stay down until well into 1946, and then rose more rapidly. It is of interest to note in the case of fuels, for instance, that even now it has not risen much beyond the price in 1923, after the postwar adjustment. That is in great contrast to 1920. The CHAIRMAN. What is that legend? Mr. CLAGUE. That is World War I-the picture year-by-year, in World War I. This particular chart shows the price of fuels. Textiles, you will notice, rose in the early part of the war, and then were stabilized for some years, and then finally rose again. The CHAIRMAN. From your experience as an expert, I ask this question: Is it not historically a fact that, and we may expect it now in the postwar ere, the whole level, the final level after we get through, will be much higher than it was before, in wages and in commodities and all? Mr. CLAGUE. Yes; that would be my judgment. The CHAIRMAN. We will never go back again to the old order. You do not expect it now? Mr. CLAGUE. We did not after World War I and we will not after World War II. The Bureau of Labor Statistics also publishes the Consumer's Price Index, formerly called the Cost of Living Index. It measures charges in retail prices of the commodities and services purchased by wage earners' families in 34 large cities. In World War I consumer prices rose from an index of about 72-base equals 1935-39 average—at the beginning of the war in 1914 to about 150 at the peak in 1920—a doubling of prices in 6 years. In World War II consumer prices rose from about 100 in 1939 to 165 in November 1947-a smaller increase-two-thirds-in a longer time-8 years. Although consumer prices today are higher than they were in 1920, we are not yet on as precarious a pinnacle compared to prewar levels as we were at the 1920 peak. (The chart referred to will be found on the opposite page.) In other words, if we think of this price rise in terms of a distortion of the prewar price level, the 1920 peak represented a doubling at the time that the break came. The 1947 peak is not yet a doubling of prewar levels-only about a two-thirds increase. The line would go up off the chart if the rise since prewar were equivalent to the rise that we had in 1920. When people look at the chart and see that the index is higher than in 1920, they have the feeling that the decline, when it occurs, will be worse than in 1921; but it sems clear that this recent rise is not as high proportionately as was the peak in 1920. This fact therefore might indicate that the decline would be proportionately less this time. Wages also rose during both wars, but in somewhat different ways. Here I have a chart which shows the earnings of factory workers. (The chart referred to will be found on p. 190.) |