matter of alternative, it is my opinion that a better plan of
adjusting wages to price movements can be devised. The basis of it
should be the change in the index number of prices of all important
commodities produced within the country. Any scheme of adjustment
arranged on that basis would have one distinct advantage. It would be
representative of the fundamental distributive relationship--that is the
relationship between the various levels of earnings and the total
product of market values. It would assure a closer accord between wages
and total product than the widely used method already studied.

Nevertheless, it must be admitted that this plan also is not free from
disadvantages and difficulties. Some difficulties of interpretation
would remain. The selection of the ratio in which wages should be
changed with reference to the course of price changes would be wholly a
matter of judgment. For due to the changes in the expenses of production
and to the changes in the volume of production, it will always be
impossible to reason concerning profits merely from the facts of price
change. And secondly, since all prices do not change equally, even if
wages are increased in accordance with the changes in the index number
of all prices, these wage increases might cause price changes in certain
directions.

Weighing all the difficulties, it may be that the best method that can
be devised would be something in the way of a compromise between the two
methods that have been discussed. That is, wage adjustment to a rising
price (and to a falling price level--if such adjustment is contemplated)
level could be made on the basis of the change in the price index number
of all the important commodities produced within the country; but in the
making of the index number, the prices of food, rent, and clothing
could be given a heavy weight (50 per cent., for example) of the total.
Such a compromise would tend to assure, on the one hand, that the wage
change did express in a considerable measure the change in the cost of
living. And, on the other hand, it would tend to keep wage changes in
closer accord with the changes in the total value product of industry
than any method based solely on a measurement of the change in the cost
of living.

In conclusion, however, it may be remarked that when the prices of the
essentials of economic existence are increasing very rapidly, there is
no way, under our wage system, by which the welfare of the