prices since 1896, while they tended to increase when prices were falling before 1896. In other words, wholesale prices move faster, in either direction, than retail prices. Figure 4 illustrates this fact, and more
Fig. 4. Movements of Retail and Wholesale Prices
(after Wesley Clair Mitchell)
Showing: (1) that the two roughly correspond; (2) that, in general, wholesale prices have moved faster (whether down or up) than retail prices; and therefore (3) that "middlemen's profits" will not explain the rise from 1896 to 1907.
recent figures of the U. S. Bureau of Labor Statistics confirm it.
The common idea that "profiteers" are responsible for rising prices is, as will be more clearly seen in Chapter III, a reversal of the truth. Rising prices are responsible for profiteering.
3. Circular Reasoning
Obviously no explanation of a general rise of prices is sufficient which merely explains one price in terms of another price. To say that the cause of rising "prices" is rising "wages" is merely to say that the prices of commodities have risen because the price of labor has risen; and we might as well turn it about and say that the price of labor has risen because the prices of commodities have risen and so driven workmen to
