Interregnum Production, Price and Cost Changes, 1913-1923
THE changed conditions which followed the outbreak of the World War brought certain immediate shifts in economic tendencies. Many of these changes were closely associated with the temporary conditions due to the war. Other changes were more enduring, and their effects persisted, to shape the direction of American economic development during the years which followed the signing of the Armistice.
The war altered the directions in which the productive energies of the United States were being expended. Even before our entrance the demands of the warring countries had placed heavy emphasis on the production of food, munitions, ships, clothing, chemicals and similar goods. The construction industries and other industries producing goods not directly necessary for subsistence or for the prosecution of war languished.
In the field of prices the moderate but persistent advance which had characterized the preceding eighteen years was quickened. Between 1914 and 1920 the level of wholesale prices in the United States advanced 127 per cent, as compared with an increase of 46 per cent between 1896 and 1914. Of greater importance than the rise in the price level were the abrupt changes which occurred in relations among the prices of important commodity groups. The slow secular divergences of prices in different groups which had characterized the two preceding decades were succeeded by sharply accentuated alterations in price relations, many of them reversing tendencies previously prevailing. In 1917 a further important factor, that of price control, was introduced. During the preceding quarter century the development of monopolies and semi-monopolies and the consummation of various formal and informal trade agree-