There are, of course, no collected statistics upon which we could base a fairly accurate estimate; but my own conclusion (and it isn't a wild guess, either) is that for every dollar of real value or actual investment represented in the corporate properties of all kinds-industrial plants, transportation systems, public utilities, etc.-$3 of inflation have been arbitrarily added.

INFLATION OF FARM PROPERTIES

This ratio of $1 actual investment or natural, normal value, and $3 inflation, is apparent in all our statistics with regard to corporate properties. Multiply this by 25 or 30 billion and you'll get an idea of what has taken place. But what is still more obvious is the fact that inflation-tremendous, terrific, and violent has taken place within a period of less than 30 years-and applies to all properties.

Let us take a glance at the statistics for farm properties in the United States (land, buildings, equipment, livestock, etc.).

1900_

1910.

1920--

Value of farm property

$20, 439, 901, 164 40, 991, 449, 094 80, 500, 000, 000

Today the value of farm properties is estimated at approximately 58 billion.

REAL ESTATE INFLATION

A similar "rise in value" is, of course, predicable for what classifies as urban real estate-land and buildings. Without going into a lengthy discussion, the increase in inflated real-estate valuation has been enormous-fully equalling, if not exceeding in the aggregate, the inflation ratio predicable of corporations and farm properties.

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NATIONAL WEALTH" STATISTICS

But the most illuminating and conclusive summary of the inflation storyshowing how we arbitrarily "wrote up" values-we find in our national wealth statistics.

According to the United States census statistics, the national wealth in 1880 was $43,642,000,000; and in 1890 it was $65,037,000,000, an average increase of $2,140,000,000 a year.

By 1895 the national wealth had risen to $77,000,000,000, an average increase of $2,400,000,000 a year.

By 1900, five years later, it had mounted to $88,517,000,000, which was at the rate of about $2,750,000,000.

These increases in the Nation's wealth seem to me reasonable, natural, and normal. Then we entered upon our wild inflation career.

Now observe.

By 1904, four years later, our national wealth had mounted to $107,104,-211,917, an increase at the rate of $4,600,000,000 a year.

By 1912 our wealth had risen to $187,739,071,090, which was at the tremendous rate of increase of about 10 billion dollars a year.

In 1913, according to the statistics of the National Industrial Conference Board, our national wealth was $190,713,000,000.

By 1920, according to the same authority, our wealth had risen to $488,692,000,000, an increase during the 7-year period from 1913 to 1920, at the rate of $42,000,000,000 a year.

It is only fair to say that the National Industrial Conference Board afterwards gave us a more conservative estimate. Its estimate of the national wealth in 1925 was $362,000,000,000, which still represents an annual increase of nearly $15,000,000,000. Wealth does not pile up that fast, gentlemen; most of it was inflation.

Today our national wealth estate is $360,000,000,000.

My estimate is that of the $360,000,000,000 of our so-called national wealth, 160 billion is sheer inflation. And when I say this I think I'm exceedingly conservative. One hundred and sixty billion dollars of inflation without any assets behind it.

Because it is on the inflated valuations and not on the actual value-or actual investment-that costs are figured and profits computed. Because it is on the inflated valuations of their properties that landlords are collecting rents, farmers estimate the prices of their products, railroads fix their freight and transportation rates, public utilities their rates, and manufacturers the prices of their commodities.

Figuring only 5 percent on the 160 billion inflation, the consumers of service or commodities have been paying approximately $8,000,000,000 a year over and above what they should have paid.

The one point I want to stress to you today is this, that inflation is directly responsible for a 300 percent increase in the prices of living commodities. All the other evils follow from this.

THE THREE CARDINAL POINTS

There are three things that I predicate and must prove to you:

1. Inflation is responsible for a 300 percent increase in the prices of living commodities in less than 30 years.

2. This 300 percent increase in the prices of living commodities has seriously disturbed the exchange value and purchasing power of money.

3. This 300 percent increase in the prices of living commodities has converted what was once a perfectly healthy 100-cent dollar into a 25-cent dollar. Frankly, as I see it, unless we correct what's actually wrong, there is no hope for our economic salvation or financial redemption. Let's proceed with the proof.

INCREASES IN COMMODITY PRICES

The increase in commodity prices synchronizes exactly with the inauguration of the inflation system. My studies on this subject date back to 1896. In 1896 the dollar had its greatest purchasing power; prices were comparatively low. In 1897 the trust era began. Immediately, in order to earn dividends and reap profits on the inflated valuation of the industries that had been overcapitalized, it was necessary to increase prices. Prices, for many living commodities, were raised, in the beginning slowly and cautiously, a cent or two at a time. By 1913 the cost of living had increased a round 100 percent. The unit of goods that could be bought in 1896 for $1, now cost $2.

What was the effect on the dollar? This-the dollar that in 1896 had a 100-cent purchasing power, now had only half the purchasing power; it had become a 50-cent dollar.

Some of you may recall that around 1912 and 1913, things economically began to wobble; price increases had about reached the limit; it wasn't possible to raise them much higher. There was considerable discontent and unrest, not only among the wage earners, but people generally. Financially speaking, it was clear that we were headed for the rocks. According to my computations, the smash was due about 1915. But in 1914 the European war broke, and so for the next few years the war was blamed for the disturbed conditions. Commercially speaking, we remained in status quo,_until we actually got into the war ourselves. Then things began to hum. Prices went sky high. By 1920, prices in general had risen a round 100 percent over the 1913 prices. But taking the 1896 prices as basic, prices in 1920 were 300 percent higher than in 1896, an increase of 300 percent in 25 years.

In other words, the unit of commodities that could be bought for $1 in 1896. cost $2 in 1913, and $4 in 1920. Needless to say, I am not speaking of any individual items; I am speaking of living commodities in the aggregate, which, of course, includes the item of rent.

According to Dun's Index number, the wholesale price of 300 articles in 1896 was $74.32, whereas in 1920 the price of these same 300 articles were $260.41. Bradstreet's Index number showed that the prices of 157 commodities, which could be bought for $591 in 1896, had risen to $2,087 in February 1920.

It is claimed by some that prices have again reached the 1913 level. This may be true for a few groups of commodities, particularly food products, but

it isn't true for all commodities. I'd go no further than to say that, all things considered, maybe our dollar at the present moment is a 33-cent dollar as compared with 1896.

But these lower prices are admittedly a temporary condition. A few months ago there was an upturn in the prices of some commodities, and this upturn was immediately hailed as the beginning of a change for the better.

Hundreds of writers on the subject, including economists, have said that there'll be no recovery until prices are raised. The idea is pretty general that business recovery means higher prices, and that higher prices signify business recovery. It is clear that those who maintain this have their eyes glued on the 1920 price level. Not until prices rise again to the maximum level, will they be satisfied; and I shall keep this "price-raising" design before me as I talk to you today.

THE FUTILITY OF PRICE INCREASES

I know that there are those who would like to get up on their toes to defend price increases, all price increases, of the past, present, and future. And if they did, I'm sure they wouldn't say a single thing I haven't heard before; they wouldn't advance a single argument with which I am not familiar. But wait. I'm not through. To reassure you, let me say that I'm not really condemning price increases so much as I'm trying to show you the hopeless futility of them.

I want to prove to you that price increases have not, and do not, and cannot benefit you, or me, or anyone, in the slightest degree. The average business man thinks that the more he gets for his particular commodity the better off he is. He's wrong. For a good many years now we've all been laboring under the impression that the higher the prices the more profit one can make, and the richer one will become. My friends, that's a delusion and a snare.

If you alone could raise your prices 100, 200, 300 percent-yes, then you would be immensely benefited by the higher prices. But when everybody raises prices the thing is reduced to its lowest common denominator; and to an absurdity.

PRICE INCREASES-NO REAL ADVANTAGE

If only a few could raise their prices and maintain them, then undoubtedly the few would be benefited; but when all raise their prices, no advantage accrues to anybody. It becomes a self-cancelling system. Let me illustrate: If A makes an article that he sells to B for a dollar at a profit of 25 cents; and B makes an article that he sells to A for a dollar, with a profit of 25 cents per unit, they are both doing a profitable business.

Suddenly, under one pretext or another, A raises his price to $2; then B must necessarily do likewise, but no advantage whatever accrues either to A or B; the profit remains practically the same.

The following year A and B lock at their books; they find that they have done a 100 percent greater volume of business in terms of dollars. They can't understand why, in point of profit, they seem to be no better off than when they sold their goods to each other at the $1 price.

So both A and B raise their prices to $4 a unit; but still there is no commensurate increase in their profits. A three times greater money volume of business ought to assure them a three times greater money profit, but their books do not show any commensurate increase in profits.

Then they scratch their heads and decide to institute a series of economies, chief among which is always the cutting of wages; and so they maintain themselves on this new basis until labor trouble in their plants becomes acute. Also, on account of their radical price increases, and the lower wages they are paying, their sales necessarily drop off. And the landlord raises his rent; and, all in all, they've got a lot of worries they didn't have before.

I do not want to pursue this subject to its logical conclusion. I merely want to show that when business arbitrarily increases prices and all price increases are more or less arbitrary-business is building on sand, and is accumulating a lot of grief for itself.

PRICE INCREASES DISTURB THE VALUE OF MONEY

All this is preliminary to what I want to say most emphatically, namely, that there is only one thing on earth that destroys the integrity of the dollar; that lowers the exchange value of money, that reduces its purchasing power, and that is " price increases." I want that to sink in. There is only one thing on God's green earth that lowers the exchange value of money, only one thing under the sun that reduces its purchasing power, and that is "raising prices." From 1896 to 1920 prices increased a round 300 percent, or at the the average rate of 100 percent every 8 or 9 years. And this is the explanation of all our trouble. We are doing business-and have been doing business ever since 1920 with a 25-cent dollar, a dollar that has only a 25-cent exchange value or purchasing power, as compared with the dollar 30 or 35 years ago.

A 25-CENT DOLLAR AN ANOMALY

Now, a 25-cent dollar is an anomaly in economics. We insist on calling it a dollar, and it is, as far as appearances are concerned, truly a dollar. The Government has so designated it by printing cr stamping on its face the legend one dollar ", and it is legal tender for that amount. But in point of exchange value, or purchasing power, it is worth only 25 cents as compared with its exchange value or purchasing power 30 or 35 years ago.

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One of the most flagrant fallacies that has creqt into our economic literature, and whose constant repetition has completely corrupted all our economie thinking, is that the value of the dollar determines prices. It is just the other way around. It is prices that determine the value of the dollar. When prices go up, the purchasing power of the dollar decreases; when prices go down. the purchasing power of the dollar increases. It hasn't the rise or fall of the quicksilver in the thermometer that causes the rise or drop in the temperature; it is the rise or drop in the temperature that causes the rise or fall of the quicksilver.

was.

OUR STANDARD DOLLAR

Nothing has happened to the dollar. The dollar is as sound today as it ever Let no one deceive you on that score. The gold dollar contains just as many grains (23.22) of gold today as it did 25 or 50 years ago. The intrinsic or legally inherent value of the dollar is the same; only the exchange value, the purchasing power, of the dollar has been reduced by the simple process of raising prices 300 per cent, and so compelling us to pay $4 (92.88 grains of gold) for the same unit of commodities which formerly could be bought for $1 (23.22 grains of gold).

Here is where the correction must be made. Not in the dollar, but in the prices of commodities. Until this is grasped by everybody there is no hope of amelioration. Until a rational price adjustment has been made, tampering with the dollar or inflating the currency, will only aggravate our troubles and multiply our difficulties.

Senator Borah recently declared that our dollar is a "dishonest dollar." I beg to disagree with the distinguished Senator. It isn't our dollar that is dishonest; it is our prices that are dishonest; it is our inflated prices that have made a bum out of our dollar; it is inflated prices (an increase of 300 per cent in 30 years-100 per cent every 10 years) that have made a derelict out of what was once a perfectly respectable measure of value, and a perfectly decent medium of exchange.

OUR MONETARY SYSTEM IS ALL RIGHT

It isn't our monetary system that's wrong; leave it alone! It's our price system that's wrong! And unless we wake up to a realization of what has actually happened, our whole financial, economic, monetary system is doomed. Nothing can save it!

Of all the foolish statements made during the past 3 years, the glib one that "we'll recover because we've had depressions in former years and have always recovered", should be awarded the prize. Nearly everyone who has written or spoken about the depression, or suggested a cure or remedy, has referred to the country as being sick. And that's right, too. But evidently they have

A man may

lost sight of the fact that sick people do not always recover. recover from an apopletic stroke, even from a second and third stroke, but the fourth may be his last. He may have pneumonia oftener than once; but the third or fourth time it is likely to prove fatal. He may have heart disease and recover from every attack, but ultimately one of them will carry him off. The real solution, and by all odds the simplest and quickest way out of a tight place, is, not to multiply the number of 25 cent dollars, currency or silver, but to raise the exchange value or purchasing power of the existing number of dollars of whatever kind of currency, to a 100-cent value. This can be done only in one way, namely, by lowering prices of all living commodities to a point that will reestablish the 100-cent value of the dollar.

INFLATION PROPOSALS

There are today before the country sundry inflationary proposals, each of which, in the opinion of its advocates, will cure what ails us.

There are some who sincerely believe that inflation of the currency is the proper remedy.

Others just as sincerely believe that equally good, and even better, results can be achieved by the remonetization of silver.

Others, just as sincere, hold that going off the gold standard will work the miracle.

Again, others talk of revaluing gold, considering an ounce of gold now valued at $20 plus as worth $40 plus.

Again, others favor reducing the gold content of the dollar.

Again, others speak of a commodity dollar that will accommodate itself from day to day to price fluctuations.

And so forth.

Now, I'm not here to criticize or challenge any of these proposals, though it has occurred to me that if they are all equally meritorious, why not adopt them all and give those most concerned their choice as to which one they care to take advantage of.

But what I do want to remark is this: I have observed that every proposal made is based on the idea of raising prices. In my humble judgment the very worst action that we could possibly take, especially at this critical time, is to raise prices.

To argue that a general commodity price increase is our only salvation is about as logical as to say that the way to cure a man suffering from rheumatism is to increase the swelling in his legs and feet-to increase his agony; or, if he is afflicted with high blood pressure, to feed him foods and subject him to excitement that will inevitably increase his blood pressure; or if he has a high fever, the correct thing to do is to try to raise his temperature; or if he is in a state of coma, to administer opiates or hit him over the head with a hammer.

ness.

Muddled thinking is as much to blame for the fix we are in as is our selfishOur collective cupidity and gigantic greed got us into this mess: it is our aggregae asininity and stupendous stupidity that prevent us from getting out of it.

Commercially speaking, especially if we come to our senses, we will recover; but the rapidity of recovery depends entirely upon our speedy return to sanity. Beyond a doubt the country will survive; but to save itself, business must divorce itself from inflation. The two cannot thrive side by side. They are mutually destructive. Inflation is an economic crime. Inflation is responsible for a 300 percent increase in the prices of living commodities; inflation has given us a 25-cent value dollar. There you have it!

WE CAN'T "GET AWAY" WITH IT

The country has been "getting away with it," after a fashion, for 30 years; but it will not be possible to repeat the performance during the next 30 years. Of that I am convinced; of that I am certain.

But has the country been getting away with it? I, for one, considering the precarious condition we find ourselves in today, seriously question it. For the last 30 years we have been shouting from the housetops and in the market places that we are the richest Nation in the world.

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