ended, renewed confidence in the ability of the Treasury to resume would naturally follow, and when aided by the Resumption Act of 1875, and later by the accumulation of gold reserves, it was certain that the notes would go to par, irrespective of any further reduction in their quantity. From the war until 1879, the country was suffering from the inevitable penalties. incident to a return to the standard from which it had too carelessly departed in 1862; and the causes of its difficulties were wrongly assigned to contraction.

EFFECT OF PAPER ISSUES UPON WAGES.1

317. The great rise of prices after 1862 had a damaging effect upon wages, because the latter (in accord with what has been well-known experience in history) did not rise when prices rose. Although receiving the same money wages, when prices rose, earners of wages bought less, and the effect was the same as if wages had been lowered, commodities remaining the same.

It was true that those who received wages were able to demand an increase in their pay on account of the fact that so large a number of the working population were occupied with the war. Nevertheless the increase in wages obtained, even with this assistance, was by no means so great as the increase of prices. In many cases laborers were under long-time contracts to work at certain rates. This was especially the case with those who received fixed salaries-for instance, government employés, clerks of all sorts, and others of the same class. Thus, it is impossible that wages could have followed at all closely the changes in the value of the greenback dollar.

318. In the accompanying table have been represented variations in the prices of 223 articles and money wages, expressed after the same fashion as in the table already given; that is to say, in percentages of the wages and prices of 1860:2

I

The figures quoted in this discussion are chiefly based upon the statistics furnished by the Senate Reports, No. 1394, LII. Congress, Second Session, and No. 986, LII. Congress, First Session.

2 Senate Report on Wholesale Prices, Wages and Transportation, No. 1394, I, pp. 91 and 174.

The wages whose variations are represented in this table are those for twenty-one representative industries, in which 767,654 persons were employed. The total number of persons engaged in working for wages during the same year is reported by the census as having been 8,287,043. The returns for wages given in the table are thus for somewhat less than 10 per cent. of all those who were engaged in gainful occupations. The twenty-one industries do not include that of farming, and even for some of the industries included the returns are not very complete. So far as they go, however, the figures afford a basis for a striking comparison between prices and money wages. Whereas prices stood in 1862 at 117.8 per cent. of what they were in 1860, money wages were but 102.9. In 1864 prices were 190.5, wages 125.6. In 1865 prices were 216.8, wages only 143.1. Thus, although the laboring classes were receiving more money, the amount of commodities which they were able to buy with this money had been largely decreased.

In the following table the prices of a certain number of articles estimated to average in their cost 68.6 per cent. of the total expenditures of a family, are compared with the variations in money wages according to the principles of percentage followed in the preceding tables: '

It thus appears that adopting the prices and wages of 1860 as the point of comparison the cost of living in 1865 was 232.2 per cent. of what it was in 1860, while wages amounted to only 148.6 per cent. of what they were in the same year. This may be more clearly understood by stating column 2 of the foregoing table in percentages of column 1. This will give us the value of the real wages, that is to say, the amount of commod1 Senate Report, No. 1394, I, pp. 93 and 174.

ities which laborers could purchase in the different years under consideration. This result is given in column 3.

CHART XII'

PRICES, WAGES, AND PURCHASING POWER OF WAGES, 1860-1890.

It is thus seen that in 1865, with largely increased money wages, laborers could purchase only 64 per cent. of what they could buy in 1860.

The lesson of these tables may be understood at a glance from the accompanying diagram, in which the course of prices, wages, and the purchasing power of these wages, have been represented. The divergence in 1865 of the lines representing prices and the purchasing power of wages is most striking. It is seen that these two lines tend in precisely opposite directions, average prices reaching 216.8, while average purchasing power falls to 64.

319. For industries other than the twenty-one already referred to, returns are scanty. It has been computed that during the period from 1861 to 1866, the wages of farm labor increased about 50 per cent., which of course, would be much less than the increase in the cost of living. The following table represents the change in the money wages of the farm laborer:

Professional services and salaries corresponded to the changes in the value of the currency even more slowly. As an example of this, reference may be made to the salaries of schoolteachers in St. Louis, Boston, Cincinnati and Baltimore, and to those of teachers in the country districts of Massachusetts. These may be represented as follows in percentages of the wages paid in 1860 as 100:1

Money wages