off than in 1897: he receives now $2.80 a day instead of $2.00, and he has a surplus of $240 a year above food and rent instead of $200 as in 1897. Likewise a clerk or mechanic who in 1897 received $900 and spent $600 for food and rent, receives now $1,260 and spends $900 for these necessaries. He receives now $4.20 instead of $3.00 a day and has a surplus of $360 instead of $300. In spite of the higher prices this additional money makes him feel better off than before; consequently he has enlarged his ways of living according to his feelings, not according to his real income.
Merely to offset the price changes the workingman of our illustration, to be as well off as in 1897, should receive $3.00 a day instead of $2.80 which he actually gets, and he should have a surplus of $300 over necessaries instead of his actual $240. Likewise our clerk and mechanic should get $4.50 a day instead of his $4.20, and should have a surplus of $450 instead of his actual $360. In fact, both laborer and clerk have been losers and they have erroneously felt themselves gainers in income.
The same paradox appears with classes whose incomes have advanced proportionately with prices or have advanced faster. Everybody has the feeling of having more income than he actually has. The middle-class man who formerly saved $1,000 a year should now according to the same standards save $1,500 to offset the 50 per cent, increase in prices. Everybody to save as before should set aside annually 50 per cent, more dollars. Among social classes throughout, how large a proportion of people are doing this? If not, people are not saving as they think they are. The man who formerly carried $10,000 life insurance for the protection of his family, should now carry $15,000, merely to have his family protected as before. Any one who has not followed this ratio of increase is not protecting his family as he supposes. Further, merely not to be poorer a person with a capital of $100,000 should now have $150,000. Any one whose capital investment has augmented less than this ratio has obviously lost in real financial standing.
All along the line the diminishing dollar has played tricks on our sense of values, making us feel more prosperous than we are. As a consequence too many of the working classes have regularly indulged in Coney Island or in its miniature counterpart, in picture shows, swell clothes, etc. Too many of the middle classes have attempted automobiles, expensive summer vacations and trips abroad. Of the extravagance of the rich, there is no need to speak; it has been so glaring and senseless. Luxurious living is excellent if you can afford it. But insidiously we have been led into extravagances that we can not afford. Too many of us have been living on capital, erroneously thinking it income.