Knowledge that Transforms

THE following price and ration data were compiled in the city of Kiev in the months of June and July, I946.1 No attempt has been made to translate the prices into dollars, since both the official exchange rate of 5.30 roubles to the dollar and the diplomatic rate of I2 roubles, in effect at the time, were admittedly arbitrary. The problem of comparing Russian food prices with those prevailing in other countries is further complicated by a number of factors. The Russian diet stresses different products than those making up the western dietary,2 hence a comparison of specific prices may possess little significance. The price of rye and whole wheat bread is of dominating importance to the Russian consumer, while it is of secondary concern to the consumer in Canada and the United States. Quite the reverse holds true of the price of meat. The wide spread between prices in the ration stores and those in the commercial stores and the public markets characteristic of the period of rationing adds another complicating factor, and one that is only partially resolved by reference to the official ration scale, since the ration issue in some categories fell considerably short of the ration scale. Any calculation of food prices in Russia must also take into account the mid-day meal provided for workers in the factory canteen or in other types of communal feeding establishments.3 These meals were in addition to the regular ration and, although there are differences of opinion as to their adequacy, the price for what was provided probably was somewhat below the price for foods normally bought outside the ration. That the amount of foodstuffs allocated to this form of communal feeding was substantial is indicated by the following approximate distribution of foodstuffs delivered by UNRRA to the government of the Ukrainian S.S.R.: 55 per cent to the trade network for sale to the population on ration cards; io per cent to children's institutions, hospitals, and the like; 35 per cent to other forms of communal feeding, and of this category of supplies the mid-day meal for factory and office workers accounted for more than 8o per cent. These factors make the direct comparison of Russian food prices with those in the western world indefinite and ambiguous. More defensible and informative, if sufficient data were available, would be a comparison of food expenditures with monthly earnings based on a range of 350 to 500 roubles per month for unskilled workers and 8oo to Iooo roubles for skilled workers.4

N September 30, I950, the Canadian authorities suspended the fixed par value (go9. US cents) of the Canadian dollar.1 During the following twelve months, the Canadian dollar fluctuated between 94 and 96 US cents, but in November I95I it started to move upward at a rapid pace. By February I952 it had attained parity with the United States dollar. It continued to rise, reaching a peak monthly average of US $I .04I7 in September. After declining sharply in early November I952 to below US $I.02, the Canadian dollar recovered to an average of US $I.03 for the month of December. During the period from the middle of I950 to November I95I, capital imports from the United States provided the main source of strength for this currency. Since then, however, an improved trade balance has become the important factor. Had the authorities been prepared to buy United States dollars and gold freely, the appreciation of the Canadian currency might have been moderated and official holdings of foreign currencies augmented. During the recent appreciation, however, the Canadian authorities have pursued a policy of nonintervention in the foreign exchange market. Since this policy was maintained even during the third quarter of I952 when the premium exceeded 4 per cent, it would seem that the Canadian authorities have not altered their thinking about exchange rate policy since September I950. When the fixed par value for the Canadian currency was suspended in I950, the authorities announced that they would intervene only to maintain orderly market conditions. This policy was reaffirmed by Finance Minister Abbott in Parliament on February I9, I953, in these words: As I have stated before, our policy has been to allow the exchange rate to be determined by the normal play of economic forces without official intervention, except to ensure orderly conditions in the foreign exchange market. No attempt is made to reverse persistent trends, but only to smooth out excessive short-run fluctuations.2

JETERANS transfer payments have become a prominent segment of the income received by individuals. Although adopted to serve other purposes, the payments have important implications for the per capita income differences among the 48 states. The use of the state distribution of income as a policy determinant and as a tool of economic analysis requires a thorough understanding of the factors with which the differences are associated. The present article isolates a specific type of payment for study, and the results will add to the growing body of knowledge concerning the forces underlying the geographic income aggregates.2 Specifically, it should indicate whether the government programs embodying the veterans payments are offsetting or accentuating the state per capita income differences arising from other sources.

3.5 per cent of national income, while subtractions amount to only 0.4 per cent. (See p. I04.) 4. The so-called technical bias works both ways. It may result in some cases from greater detail of information for I937 than for I899the reason ascribed by Mr. Lebergott-but it results in many more cases simnply from greater diversification of products. High concentration is less indicative of monopoly for a product with many close substitutes than for one with few. In view of the vast proliferation of products and expansion of markets over the last half century, one may doubt the comparability of any specific measure of concentration as applied to both beginning and end of the period. As in the case of growth of output, no index can adequately reflect such qualitative factors. This is not to say that they should be overlooked. 5. The term slight is not used to describe the rise of 6 percentage points in the fraction of private income but the rise of i.9 percentage points in the fraction of national income. The former rise is characterized in my monograph as substantial, a fit counterpart for significant. (See p. 45.) Most of these issues are discussed in my monograph. I cannot agree with Mr. Lebergott that his criticisms fundamentally alter the picture of the growth of monopoly and concentration gathered from recent studies, such as those of Adelman, Stigler, and myself. Nevertheless, such criticisms are of inestimable importance in pointing out errors, no matter how minor they might seem; for the goal is to unearth facts, not to prove cases.