of the United States such as those now used by the United States Bureau of Labor Statistics; and the sources, government agents, standard trade journals, and books of business houses.
(3) Only wholesale prices should, I think, be used. We could not profitably use retail prices or prices of labor (wages) or the prices of securities or the prices of real estate or rents.
There are several reasons for the restriction to wholesale commodity prices, especially: (a) the greater ease of fixing or standardizing definite grades of wholesale commodities than of any of the other classes of goods mentioned; (b) the greater importance of wholesale trade and the fact that most important contracting parties are more concerned with wholesale prices than with retail; (c) the greater sensitiveness of wholesale prices to the influences which affect price levels; (d) the fact that stabilization of the wholesale index number will carry with it the stabilization of the level of retail prices far more promptly and fully than vice versa.
The last two points are worth a little elaboration. It is well known that certain prices are sensitive and others insensitive to the various market influences. For instance, the wholesale price of silver is so responsive to every market wind which blows that rarely are the quotations on two successive days alike; while, on the other hand, street railway fares have only begun to budge from the traditional five cents after having stood stock still through more than two decades of upheaval of prices of most other goods and services. As our index number is designed to register promptly the effects of an increase or decrease of money in circulation, an index number made up of prices, almost unchangeable like street railway fares and the price of postage stamps, would be, to that extent, like a painted clock, a false and useless indicator.
In short, the prompter the indications for needed adjustments, the prompter the adjustments, and
