John MacLean Internet Archive                                                    Transcribed by the John MacLean Internet Archive

Inflation and High Prices

by John Maclean

Source: The Call 29th January 1920, p. 4 (710 words)
Transcription: Ted Crawford
HTML Markup: Brian Reid
Copyleft: John MacLean Internet Archive ( 2007. Permission is granted to copy and/or distribute this document under the terms of the GNU Free Documentation License

That there is a false tone in the leading articles of “The Statist” is shown in the issue of January 3rd last, under the caption, “Inflation.” “We have in various articles recently endeavoured to show that there is no such thing as inflation, and that, as a matter of fact, such a thing is impossible,” so it says:

“What raised prices in the late war was that so many men and so many women were drawn from productive employment to unproductive employment, and so many ships were diverted from carrying what honest people desired to have for the convenience, the comfort, and the enjoyment of their various families, that the things could not be obtained. There was not enough of anything. There was not even a pretence that there was enough.”

If that be true we should have expected that with demobilisation and the return to peace production prices would have fallen. Are prices to-day lower than they were a year ago? No, they are higher and they are rising. The more paper money the Government issues the higher rise prices. The facts of 1919 disprove “The Statist” quack.

Against it let us place extracts from an article in “The British Trade Review,” January, 1920, entitled, “Paper Currency and High Prices.”

“The last few years have seen an enormous increase in the issues of paper currency, so great, in fact, has been the output from the currency printing presses that the face value of the paper currency emitted during four years of war exceeds, the total, value of gold and silver produced in the whole world since the discovery of America by Columbus. The evil is aggravated, too, by the fact that barely one-fifteenth of the paper notes put into circulation by the various Governments has any sort of metallic backing at all, and yet we get the perpetrators of this debasement of the currency, pointing to the prosperity of the countries in which paper circulates . The real evil in paper money is the emission of inconvertible notes, the effect of which, or, indeed, of any excess issue of paper currency, is to drive gold out of circulation .

“We find that against an increase of 7,639,960,000 in the face value of the notes in circulation, there has been an increase of only 498,000,000 in the gold held, as cover for the notes, The natural result is that prices have been forced up in the various countries to undreamed-of levels, or, in other words, the currency has depreciated, and the value printed on the notes is only a chimera .

“The position is this: if the currency be contracted, or a country has a limited supply in circulation, the value of the money is high, that is, the amount of commodities and goods which it will purchase will be large. On the other hand, if the currency be expanded, that is, its-volume increased, the value of the money will be relatively low, since the quantity of goods or services it will purchase will be relatively small. It is this increasing volume of currency which is the principal source of the trouble with which we are faced to-day from the world-wide rise in prices.

“By the continued redemption of the present excess supplies of paper money prices of commodities be lowered, and as soon as these begin to fall, so soon will the worker perceive that his wages will purchase more of the necessaries of life; he will sell his labour for less; he will moderate his demands; there will be a greater incentive to increase production, and the whole world will benefit and be a happier place than it is to-day.”

The writer agrees with Marx, and the position we have urged in “The Call” up to the point where he, lamb like, suggests that workers will be pleased to accept lower wages when prices fall.

The workers will not accept lower wages. Ours is to urge them on to demanding a minimum of 30s. a day, say, until capitalism is dead and cremated. The world is going to become more miserable for all until Communism comes in its fullness. The workers must not increase production until that happy time.

Meantime, burn Bradbury.