|The illustrations on the left indicate the major categories of expenditures for middle class Americans in 1912. Upward pressures in these categories meant that many Americans feared that they were not going to be able, in the future, to enjoy as high a standard of living as in the past.|
"Twenty-five years ago one could live in the United States as comfortably on $500 a year as he can now on $1,200," wrote one person in Current Literature [52:1912): 652].
Both deflation and inflation affect the relationships of businesses, persons and families to one another in the economy. For example, deflation tends to hurt borrowers and help lenders, while inflation has the opposite effect. Deflation brings great pressure on businesses to lower prices. Inflation brings great pressure on workers to obtain higher wages.
In general, however, the average wealth of the United States was increasing in the early twentieth century. Per capita incomes were rising slightly along with a general rise in the gross national product, a figure economists use to measure the size of the economy.
Nevertheless, inflation was a subject of considerable discussion in the 1912 campaign. Democrats arguing for a lower tariff complained that tariffs increased prices. Politicians complaining about "the trusts" fed popular perceptions that big businesses were unfairly controlling prices, and gouging the consumer. President Taft and the Republicans were the principal victims of this situation. Taft and the Republicans went to great lengths to explain (correctly) that the rise in the cost of living was world-wide, and not thus caused by anything either Republicans in general or Taft in particular had done in their policies.
|Taft, on accepting the Republican nomination, observed:|
"A careful investigation will show that the phenomenon of increased prices and cost of living in world-wide in its extent and quite as much in evidence in other countries of advanced civilization and progressive tendencies as in our own. Bitter complaints of the burden of increased prices and cost of living have been made not only in this country and Europe, but also in countries of Asia and Africa."
[quoted from Republican Campaign Text-Book, 1912, p. 17