more than 20 percent between July and December 1940 (charts 78 and 79). With
the completion of the cantonments, this situation has eased somewhat but the
large volume of defense housing now being built has undoubtedly been a factor
in raising the cost of building materials generally about 10 percent in the course
of a single year.
Textiles. Between June 29, 1940, and June 28, 1941, the average wholesale
price of textiles has jumped 17%1⁄2 percent. The combination of heavy Army
orders and increased civilian demand has been reflected in a very sharp advance
in many kinds of cotton yarns and fabrics. The problem has been further
aggravated by the heavy trade buying in an effort to forestall possible future
shortages, as well as by what appears to be uncontrolled speculative activity in
some parts of the cotton textile market, and by the abilty of the mills to charge
what the traffic will bear. As a result, prices of cotton fabrics have advanced
much further than any increases in raw material costs or in wage rates would
warrant. For example, at the end of June print cloth was selling at almost double
its pre-war price, having advanced more than 70 percent since the beginning of
January alone, and having attained levels unequaled in 15 years. The advance
in cloth prices far outran any increase in raw material costs; thus the price of raw
cotton rose about 45 percent since the turn of the year, equivalent to an advance
of less than 25 percent for the cloth. As a result, mill margins (the spread be-
tween prices of cloth and prices of raw cotton) are higher than at any time since
the latter part of 1920. This advance in the prices of cotton goods has just begun
to be reflected in the cost of a wide range of articles purchased by civilians such
as cotton clothing, house furnishings, cotton bags, and the like, and will un-
doubtedly affect them even more in the next few months.
Metal markets. In the metal markets, the production of armament has led to
so wide an expansion of demand for iron, steel, copper, zinc, aluminum, etc., as to
necessitate the imposition of mandatory priorities for almost all major metals.
Manufacturers who produce for the civilian market have consequently been
forced to turn to scrap-metal markets to satisfy their requirements and, as a result,
prices of scrap metal have risen very rapidly, in many cases to levels in excess of
published quotations for the virgin metal. Although price ceilings have been
set for a considerable number of scrap metals, the enforcement of these ceilings
has been extremely difficult with present techniques. Reports from the trade
press and other reliable sources indicate a chaotic market condition in which
supplies have gone to the highest bidder, and concerns which honestly sought to
comply with the price regulations have been unable to get supplies.
RETAIL PRICES AND THE COST OF LIVING
It always takes some time for price increases in the wholesale markets, except
for perishable goods, to work their way into retail stores. When retail advances
do begin, they often continue long after wholesale advances have slackened. In
view of the recent rapid price increases in wholesale markets, it is clear that the
advances in retail stores up to the present time represent only the beginning of
the rise. With the exception of the speculative flurry in the early months of the
war, and scattered increases for particular goods, living costs advanced only
moderately until March of this year, when they were about 21⁄2 percent above
pre-war levels. From mid-March to mid-June, there have been much more rapid
increases in retail prices, as the impact of previous advances in wholesale markets
began to reach retail stores. Food costs, the most important factor in the rise,
increased 71⁄2 percent, and preliminary reports indicate another increase of nearly
2 percent in the last half of June alone (chart 80). Clothing costs rose 1 percent,
housefurnishings over 2 percent; fuel, electricity, and ice nearly 1 percent; and
miscellaneous costs about 1 percent. Rent, on the average in the country as a
whole, rose about 1 percent between March and June, with great increases,
affecting many tenants, in localities with large defense activity.
Food.
The rise in food costs since March 15 of this year is half again as great an increase
as in the entire previous 19 months. Meat prices rose over 4 percent in the second
quarter of this year, and are now, on the average, more than 10 percent above
pre-war prices. Dairy products, eggs, and fruits and vegetables, as a whole
showed similar gains (chart 81).
The most important factors in causing food prices to rise have been the heavy
increases in consumer demand and Government purchases and more recently the