The High Cost of Living in the Progressives' Economy

Eric Rauchway

Despite its currency in political discussion, "the economy" has no more intrinsic reality than "the nation"; indeed, the two concepts were simultaneously modernized at the turn of the twentieth century. The reinvention of the nation has received recent historical attention, especially insofar as Theodore Roosevelt's New Nationalism included new notions of American identity based on liberalism and racism.1 By contrast, we have looked on the Progressives' modernization of economic ideas simply as an achievement, whether for good or ill. But those reformers did not get quite the economic arrangements they sought, nor did they lack opposition. Rather, politicians and the makers of popular culture weighed in, giving economic issues a variety of meanings that make them, as one contemporary observed, a "forcible text" on the period.2	1
As the underlying characteristics of the United States economy shifted in the early twentieth century from scarcity to abundance, from producerism to consumerism, reformers sought to straighten out even the vocabulary Americans used to discuss economics. Whether we conclude that Progressives created the "very language" with which we now dispassionately discuss the economy or, more pessimistically, that businessmen and policy makers were making "language, like so much else, the servant of economic interest," we assume that language followed a straightforward path from conception to implementation as policy to public interpretation.3	2
By contrast I argue here that symbols and ideas about money work like money itself. People coin concepts that stand for values. Those concepts enjoy currency but may go out of circulation if they no longer give us purchase on a problem. Or they may turn up far from their point of origin, doing a job their creators did not intend, just as dollar bills circulate as currency in Ecuador or serve forgetful academics as paper for shopping lists. Because ideas about money behave like money, a history of economic language must comprise intellectual, political, and cultural history. A straightforward statistical concept such as the "high cost of living," put into political circulation by economists to enable policy debate, became in journalistic shorthand "old h. c. l.," a symbol of economic dread and desire. This article traces the career of "h. c. l." from reformist tool to sales ploy, showing how what writers called "the burning question" and "the biggest problem in the country" in 1910 had within a decade become a way of describing ambitions for a more comfortable future. As we shall see, invocations of the concept by economists who wanted to use the power of government to define the national economic interest failed at the outset, as did those of reformers who tried to define modern economic issues in the inherited terms of a previous generation. But advertisers and the makers of popular culture, thinking always of how to relieve consumers of a few extra dollars, immediately succeeded in making the rising cost of living mean something in the age of inflation.4	3
To suggest that "the economy" and its component concepts are socially constructed is merely to point out that they have a history. To an economist, a rising real cost of living means that during an inflationary period retail prices are rising faster than wages. Whether the cost of living is therefore high is a social or political question. From 1897 to 1929 prices rose almost without pause in the United States and other gold-standard countries because gold had become more plentiful and therefore inflationary. Not till statistical techniques had been refined, beginning with the development of sampling in the 1920s, were economists able to say confidently that during this period rising wages outpaced rising prices. But even if Americans suspected this trend at the time—and some did—it was impossible to predict what would happen next and difficult to explain why it was happening: for decades, they had been used to problems of deflation. Policy frameworks had to change, and so did the language for discussing how and why.5	. . .