PART I RELATIVE PRICE CHANGES. Relative prices The increase in the various items of the family budget from January 1, 1916 to January 1, 1918 were ascertained to be: Appended Table 1 shows these increases by the three official classification territories of the Interstate Commerce Commission, and compares them with the increases shown by other recent studies. Combined weighted averages Weighting the above increases according to the proportion of expenditure for each item for different sized incomes, gives the following combined percents of increase: The above figures show how much more it would have cost to live on January 1, 1918 than on January 1, 1916, provided the standards of living remained the same. They may, however, fall short of showing the true increases by as much as 4 or 5 points, for the following reason: It is impossible to determine accurately the relative increase in the cost of living even in normal times, and more difficult *The percents for specified incomes under $600 would be Incomes up to $200, 42%; $200 to $400, 41%; and $400 when prices are rising rapidly, at Purchasing power of the dollar On the basis of a 40% increase in the cost of living, the purchasing power of the workingman's dollar is 71 cents. Statements have occurred frequently in the press of late that the purchasing power of the dollar is now only 50 cents, compared with pre-war times. This is based on a 100% increase in wholesale commodity prices (Bradstreet and Dun indices) which is not a true measure of the increase in cost of living. Variation by localities Although there was considerable variation in the relative prices for the various items, as between the three I.C.C. territories (Table 1), the percents of increase for all items combined showed such slight differences that they were disregarded. Table 2 shows the weights, i.e. the proportion of expenditures for each item, used in arriving at the combined percents of increase. Similar figures of other wellknown budgetary studies are shown in comparison. Sources of Basic Data and Methods of Compilation FOOD The U. S. Bureau of Labor Statistics retail price quotations on 22 articles of food were used. These are monthly quotations secured from 42 large cities in different parts of the country. This Commission computed the index number for the individual cities, and combined the cities into I.C.C. classification territories of Eastern, Southern and Western. The indices for the three territories were combined into a U.S. index by weighting each according to ratio of population in each territory. RENT The Commission collected its own figures on house rents, first by direct inquiries to real estate agents in the 42 cities mentioned under "Food", and second by field investigations of its own agents. These inquiries indicated that the rise in rents had just begun during the latter part of 1917. The increases in each territory were combined into U.S. totals by weighting according to population. Appendix A shows the form used. CLOTHING Prices on clothing were also secured by the Commission by direct inquiries to retail merchants in the 42 large cities. Price quotations on the various classes of articles of male and female wearing apparel were secured for December, 1915 and December, 1917. The quotations were combined by weighting each class according to the proportion of expenditure for each. The ratios for each territory were combined into U.S. ratios by weighting according to population. See Appendix B for forms used, which also shows the weights used for each class of apparel. On account of the substitution of cheaper grades of articles, especially woolen apparel, the increase of 44% shown for all clothing is believed to be low. FUEL AND LIGHT The retail price quotations on anthracite and bituminous coal, secured by the U. S. Bureau of Labor Statistics in January of each year from the 42 large cities, were used. No increase was assumed for gas or electricity. These quotations were checked against reports of the U. S. Fuel Administration. The price quotations for bituminous The Commission was assisted in collecting the data on house rents and clothing by the U. S. Chamber of Commerce. 84 coal were used for the Southern and Western territories; & weighted average of anthracite and bituminous for the Eastern territory. Territorial ratios were combined into U. S. totals by weighting according to population. SUNDRIES The increase in each important item of this sundry group was ascertained in various ways. Increases on amusements, travel, liquors, tobacco, postage, etc., stipulated by the recent war tax law were applied. Special inquiry was made of large retail drug stores for drugs and medicines. The remaining items were arbitrarily estimated; no increase was allowed for some items. The increases for each item were combined by weighting according to the proportion of expenditure for each, as shown in the U.S. Bureau of Labor study of 1901, somewhat adjusted to meet present conditions. No attempt was made to differentiate between the three I.C.C. territories. The following shows the increase for each item and the weights used: |