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Senator BARKLEY. Let me ask you a question about this chart (chart 10). Why is it that cheese went up proportionately so much more than butter, both being based upon dairy products? Butter represents now 150 percent of the 1939 level, and cheese about 187 percent. Mr. HENDERSON. I do not know.

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Senator CLARK of Idaho. Would not part of the difference be found in the lease-lend arrangement?

Mr. HENDERSON. I do not know. It might have something to do with it.

Senator DANAHER. May we have indicated for the record what the 28 basic commodities are that are treated in the first phase of the graph to which Mr. Henderson last referred?

Mr. HENDERSON. I will put them into the record. Senator DANAHER. Will you please refer to table 12 appearing in the House hearings at page 245, which lists the 28 commodities referred to in the chart that you exhibited earlier?

Mr. HENDERSON. The 28 commodities are: Wheat, No. 2 hard, and No. 2 dark; flaxseed, barley, corn, butter, tallow, hogs, steers, lard, sugar, coffee, cocoa, shellac, rubber, hides, rosin, cottonseed oil, print cloth, silk, wool tops, burlap, steel scrap, tin, copper, lead, zinc, cotton. This chart shows the course of the cost of living in the last war, by the major elements. Here is what food did and here is what clothing did and here is the course of rent [indicating on chart 13].

I should like to take up now what happened to real wages of Federal employees in the District of Columbia during the last war (chart 14). As you can see, their cash weekly wages went up, due to the fact that there were several special increases in Government salaries, particularly for the low-paid employees, during the last war. But even that rise in the cash weekly wage was not able to keep the standard of living from going down. And so between 1914, the outbreak of the war, and 1920 the average worker lost 25 percent in his standard of living.

Wages in the eight important manufacturing industries went up 140 percent. Real wages, however, were only up 20 percent (chart 15).

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This is what happened to teachers [indicating chart 16]. They had a 20 percent loss, despite the fact that, beginning in 1918, the average salary of teachers was on a steady increase.

Senator TAFT. I suppose the manufacturing industry presented the greatest wage increase of any group?

Mr. HENDERSON. Yes, sir; wage earners in industries that were at strategic places were able to beat the cost of living, but in beating

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it they had to have a 120-percent increase in order to get something like a 16- to 18-percent increase in their relative well-being.

Senator TAFT. You mean, you had to get an increase of 100 percent?

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Mr. HENDERSON. Yes. But the effect of the price level was to accelerate it, of course, and to make it unmageable and also to add to the impossibility of keeping the econon'v in any sort of balance in the post-war period. In other words, it is sometimes said that nobody gains by inflation. That is a pretty good truism. But, as a matter of fact, during the period of inflation some people gained. During the period of deflation some people gained. But the worker might have gotten a 20-percent increase in his standard of living for a period of several months, and then had a period during the deflation when he did not have any employment, or very minor employment. In other words, he lost over the period from m 1914 to 1924.

Senator TAFT. Are those figures on wages based on earnings or on rates per hour?

Mr. HENDERSON. They are based on the weekly income.

Senator TAFT. Representing partly increase in hours and partly increase in wages?

Mr. HENDERSON. That is correct.

Senator TOBEY. Referring to your statement that nobody gains by inflation, it was said long ago that in a war no nation wins. Mr. HENDERSON. That is probably where it came from.

Senator MALONEY. Can you give me a concrete example of who does gain during an inflationary period?

Mr. HENDERSON. I cannot think of anybody, Senator, who gains if he continues to live in this country. I think you have to die in order to win.

Senator MALONEY. You said a moment ago that during an inflation period somebody always gains and that in a period of deflation somebody always gains. It would be helpful to me if I could get a concrete picture of somebody gaining during these rises and depressions.

Mr. HENDERSON. We have a number of cases of brokers who are dealing in imported commodities and who have been doing very well, by reason of our lack of ability to get at the thing; and if any of those brokers or speculators could take those inflated dollars and keep them in a position where they could buy goods or anything of value in the deflation period, they would gain, of course. But my point is, mainly, about the farmer, the workingman, the average citizen. He has lived on his current income and he cannot gain over a long period. The speculator can if he can retain the money which he got.

Take a number of industries that made a lot of money in the last war. They made it by reason of delivering a large volume of production, of armament goods, and they lost all of it by getting caught in the $11,000,000,000 deflation of inventory that took place after the

war.

I was talking with one manufacturer this week who had just exactly that experience. Before the war this manufacturer had a good business; he had a good asset position; he had a good working capital position. He took Government orders and worked very hard himself and enlarged his staff. He made a very substantial profit out of Government orders. But in order to do that he had to accumulate metals that had gone up more than 111 percent, and chemicals that more than doubled, and in the post-war period, in addition to the decline in his

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