alling prices
follows closely upon a period of sharply rising prices, during which
latter period wage increases lagged greatly behind price increases, the
tendency for wages to rise may continue to manifest itself for some time
after prices have begun to drop. An example of such a period is
furnished by the years immediately following the Civil War.[48] In the
case of the price decline of the year--1920-21, however, wage decreases
have come promptly--and this is more likely to be the ordinary case.
Unless industry in general becomes more efficient during the period, a
continued fall in the price level tends to bring about a fall of some
degree in the wage level. However, just as in periods of rising prices
the wage increase usually tends to lag behind the retail price increase,
and even more behind the wholesale price increase, so in times of
falling prices, wages often tend to fall more slowly than retail prices,
and much more slowly than wholesale prices.[49]

The wages of different groups do not fall equally. The same dispersion
that was noted in times of rising prices is found equally in periods of
falling prices. This is to be explained in the same way as the
dispersion which occurs in periods of rising prices.[50] Organization,
however, is likely to play a more decisive part in resistance to
reduction of wages than in demands for increased wages. Industries in
which the wage earners are highly organized generally find it more
difficult to economize by way of wage reduction than industries in which
the wage earners are not organized.

The range of profits of industry during periods of falling prices will
depend upon the nature of the causes which produce the decline. If it is
simply the result of an increase in industrial efficiency, or progress
in the industrial arts, profits will continue to be satisfactory and may
even be on the increase. If, on the other hand, the price decline
results from the occurrence of those short periods of forced liquidation
known as crises, and is accompanied by that state of recuperative and
cautious business activity known as depression, profits in most
industries are apt to be quite low. Such was the 1893-96 period in the
United States. During the period of forced liquidation and immediately
thereafter, the number of bankruptcies is likely to be high.[51] No
general statement is possible concerning the duration of such a period
of depression and low profits; all accompanying circum