V. General analysis and classification, A. Factors that determine the cost of living, B. Cost of government, . The commission was appointed March 9, and organized for work March 10. The instructions embodied in the resolve creating the commission called for a thorough investigation of the cost of living in this Commonwealth, an inquiry into the causes of the increased prices of the necessaries of life as compared with wages and incomes, and into the direct and indirect effect of our present tariff laws upon wages, income and cost of living. These instructions, in brief, demanded an examination of the facts regarding the recent movement of prices, wages and incomes, and of the causes of such changes as may have taken place, with especial reference to the influence of the tariff. The short time allowed for the investigation, through the requirement that the commission should report not later than May 1, prevented any extended original research. The commission has made use of all existing material bearing on the question under investigation which could be assembled, has instituted such further inquiries as were possible and practicable under the circumstances, and has engaged qualified experts to make special studies of certain phases of the subject of inquiry. The commission has held seven public hearings, at which representative wholesale and retail dealers, acquainted with the market conditions and price changes of the leading commodities of common consumption, have been examined with reference to the changes in price during recent years. Opportunity has also been given to all persons who expressed a desire to be heard to submit their views to the commission. The reports of these hearings are too voluminous to print in this report, but complete stenographic minutes have been deposited in the State Library. The commission desires to express its appreciation of the courteous assistance that has been given in the pursuit of its inquiries by the Honorable Chairman and Secretary of the United States Senate Committee on Wages and Prices of Commodities, by various officials of the national government and of the Dominion of Canada, heads of numerous departments of the government of this Commonwealth, mayors of cities, and many other persons who have furnished the commission with valuable information. Acknowledgment should also be made of the expert assistance given to the commission by Prof. J. W. Jenks of Cornell University, Prof. Ellen H. Richards of the Massachusetts Institute of Technology, Profs. William P. Brooks and Alexander E. Cance of the Massachusetts Agricultural College, and Dr. E. M. Hartwell, secretary of the statistics department of the city of Boston. It also desires to express its appreciation of the work of its secretary, Prof. F. Spencer Baldwin. To his untiring labors it owes no small share of what has been accomplished, and it found invaluable both his familiarity with the subject and his sound judgment. In the report of the commission, which is herewith submitted, the facts as to the movement of wholesale prices, retail prices and wages are first presented in considerable detail. The causes of the changes thus set forth are then discussed at length. Finally, the effects of the changes are considered and possible remedies through legislative or other action are suggested. The main findings, conclusions and recommendations of the commission are summarized briefly in the final chapter. II. PRICE STATISTICS. A. WHOLESALE PRICES. The first task in an investigation into the increase of the cost of living is manifestly to determine the facts as to the extent of the advance in prices. In collecting and presenting price statistics it is necessary to distinguish between wholesale and retail prices. The former are more sensitive to industrial and commercial changes; they furnish a more accurate measure of the movement of values, whether upward or downward. The latter respond more sluggishly to influences tending to advance or to lower prices; they afford, however a better indication of the increase or the decrease of the actual cost of living to the consumer. It is easy to understand why retail prices move more slowly than wholesale prices. Competition operates less effectively upon retail than upon wholesale prices. To be sure, when wholesale prices are advancing, retail dealers are fairly alert to take advantage of the change, and mark up prices to their customers. But, on the other hand, they do not at once lower their prices when wholesale prices drop; they postpone such action for a time, in order to get rid of stock on hand or in anticipation of a possible advance of wholesale prices. It is the level of retail prices, however, that directly concerns the consumer. In exhibiting the movement of prices over a period of time, the method of index numbers is usually employed. The nature of this method is briefly this. A number of commodities is chosen, and the total price of specified quantities of these articles is ascertained for a given day or averaged for a certain period. The price numbers thus computed are in some tables of index numbers used without further change. Usually, how |