REFLECTIONS ON INFLATION1
| Author | A. D. Campbell |
| DOI | http://doi.org/10.1111/j.1467-9485.1956.tb01176.x |
| Published date | 01 October 1956 |
| Date | 01 October 1956 |
REFLECTlONS
ON
INFLATION
I
WE have the unwanted distinction of living in one of the great
periods
of inflation
of
modern times. There was, first, the long period-about
a century-during which Spanish treasure raised prices throughout
Western Europe. The second great inflation took place during the
Revolutionary and Napoleonic Wars. The third period, inspired by
the First World War, ended in
1920.
Finally, in the current
period,
prices in general are higher than they have been at any time in the
last
150
years, and
in
the United Kingdom we are experiencing the
highest sustziined rate of increase
of
prices, recorded in peacetime.
since
1800.
What sort of price movements have we been accustomed to
in
the
United Kingdom?
In
the nineteenth century there were three major
movements. From
1818
to
1849
prices fell by about
a
half
:
from
1849
to
1873
they rose by about a half
:
and from
1873
to
1896
they
fell, once more, by about
a
half. Over the century prices fell
:
the
value of money in
1896,
measured admittedly by imperfect methods.
was about three times
as
high as in
1818,
and almost one-third higher
than
in
1849.
Nineteenth-century experience, therefore,
was
of falling
prices.
or.
if
we concentrate
on
the second half
of
the century,
of
fluctuating prices with
a
downward trend.
In the twentieth century there have been,
so
far, three major price
movements, the last one being unfinished. From
1896
to
1920
prices
rose by about
200-300
per
cent., most of the increase taking place
in
the years from
1914
to
1920.
From
1920
to
1932
prices fell by
a
half to two-thirds
:
by
1932
wholesale prices had fallen to something
like their
1914
level though retail prices were still about
40
per
cent.
higher than
in
1914.
Since what happens during a great war might
reasonably be excluded from the experience
on
which expectations
about future prices are based, perhaps there were grounds for believ-
ing that.
in
the long period, prices would not rise unduly and might
even fall.
This generalisation about prices has been thrown very much in
doubt by events since
1932.
The third price movement of the
twentieth century has,
so
far. lasted twenty-three years. Wholesale
prices have risen by about
300
per
cent. and retail prices by about
This
article consists substantially
of
an Inaugural Lectiire given
in
Queen’s College
of
the University
of
St. Andrews on
21st
May
1956.
22
1
To continue reading
Request your trial