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Show r? . J i "t THE CITIZEN i il P in LEVEL OF PRICES IS UNLIKEL Y, EXPER PS SAY PRE-WA-R 3 i I n oi u 'i t , Everybody of a thinking' turn of mind in this great commercial tr of ours is seeking the answer to three questions: res.-thindustrial depression to end some time in 1921? Will prices decline until they have reached pre-wlevels? me. Will wages decline in proportion to prices? hh The consensus of opinion among business men and economists lat; the crisis of readjustment will end before the middle of 111 Present year and that after that we shall enjoy a condition of levels and that ialcy; that prices will stop short of pre-wwill not keep pace with the price decline but will follow levels. lvcy and wTill not touch pre-wThis is the general opinion briefly stated. To arrive at these roususions students of economy and business have considered the 'Potion from many angles. i prail5ome economists place the stress on supply and demand ; others verrmore prominence to what, broadly speaking, may be called the 11 1T:y, question. or example. Professor Irving Fisher of Yale university cons that there is not the Slightest chance that prices will con-t- o fall until they reach a level. He pays little atten-t- o 'the demand for and the supply of goods. To his mind it linly a monetary and banking question. He maintains that the ral Reserve Act of 1914 and the war produced a double inflation. It was this double inflation which raised prices so rapidly in ist five years, he says, and there is no corresponding deflation ht. The Federal Reserve Act, with its expansion of credit eyond the possibilities of the old national banking system, is ipery wJth us to stay; and, while foreign nations may gradually Iraw a part of the gold which we have acquired because of the ntheir finances are in such a state, because of the great costli-ircethe war, that this withdrawal of gold must be spread over of ':es and generations. s th;The .truth is that the recent recession is not the beginning of general deflation, but only the rebound always incident to the nal t cycle after a period of rapid inflation. :olle.)f course Professor Fisher takes other economic features into he believes that the Federal Reserve system has iasizqeration :onntanentlv affected our credit and that the return to normalcy nsehuot mean a return to pre-wprices or wages. Warren M. Persons of Harvard ventures a direct pre- i actroessor in the Review of Reviews, he says : n Th. when, First, the opening months of 1921 probably will be months of j trial depression, some unemployment, decreased wages, in- mch d commercial failures, lower retail prices, reduced imports, an natemoney market, and increasing security prices. In the spring, ork ver, industrial depression will be replaced by revival. An early the physical volume 5e mil of industry is indicated by the fact that eduction of both manufactures and mining in the United States liver? onsiderably lower in 1919 (and probably in 1920) than in 1916. md 1918. Present stocks of goods, therefore, probably are not The establishment of a sound basis for financing the export raw material to Europe would hasten our industrial readjust-- c ar ar ar pre-Av- ar of I ar - the public is convinced that the bottom bar been reached buying will begin again with considerable briskness. Unless production increases prices are bound to go to higher levels. Several factors combine just now to keep production down. Many industries are laying off men in the hope of maintaining the open shop and reducing wages. This, of course, keeps production curtailed. It is an artificial factor which modifies the law of supply and demand. Combined with the normal unemployment there is this artificial unemployment. Moreover, the inflow of immigration adds another element of unemployment. It produces a surplus of labor and helps the employers to pick and choose. On the other hand the efficiency of labor is increased by the natural desire of those who have jobs to retain them. It is admitted on all hands that recovery would be more rapid if we could dispose of our raw materials and our manufactured goods in greater amounts abroad, but owing to the exchange situation and the hard times in European countries our exports are decreasing and this tends to. maintain a surplus in this country despite the shutting down of factories. It is an element which may prove a serious handicap to business revival unless congress devises ways and means of inducing foreign countries to resume buying. VETO BRINGS REBUKE If the farmers quit the land because they cannot afford to sell at a loss we shall have higher prices than any that stirred us to com- plaint during the war. In war times we had the war finance corporation to help business keep the government and the people supplied with the materials essential for the winning of the war. All of us agreed that the corporation was necessary to help business because of the war crisis, but there are some chief among them the president of the United States who think that it is unnecessary to aid the business of agriculture in times of peace. Frequently peace has a crisis as trying as any crisis of war. That is why the senate and the house overrode the president's veto of the measure reviving the war finance corporation. The vote in the senate was 53 to 5. and in the house the vote was 250 to 66. The president spun a cold and colorless web of argument to prove that in the long run the country would not benefit, but the members of the two houses were unconvinced. Thev realized the gravity of the crisis. They knew that if the farmers should suffer irreparable losses as a result of the unexpected turn of the economic tide farming would become more unpopular than ever and the deplorable trend of population toward, the cities would be resumed. When all goes well we pat the farmers on the back and urge them to fulfill a patriotic duty by producing to the limit. If they suffer in the process many of us lack sympathy for their distress. In that we are unwise, for, if we may paraphrase Goldsmith fares the land to hastening ills a prey, Where towns accumulate and farms decay. 111 di be seen that 'Professor Persons emphasizes supply and l: on hd. In his opinion present stocks of goods, aside from agri-aproducts, are low. As long as the demand for them is also low level prices will continue to decline until retail prices touched bottom. Wholesale prices have already fallen to a . level, except 'lll.le minimum and that minimum is not the pre-we cases. il1 ut when the lowest level has been reached in retail prices, will mcbe:a reaction to higher levels? . rea ptfst at present even the offering of retail goods at greatly prices does not call forth the full volume of buying. This ! to general belief that prices will go still lower, but when into: will ar i The work of reviving the war finance corporation is under way and it is expected that within a month it will be able to resume those activities which proved such a boon when we were straining every nerve to win the war. In the United States treasury there is a balance of $375,000,000 to the credit of the corporation, but this probably will not be used because too much red tape is required to circulate it in the proper channels. that the farmers will able to sell their surplus products in Europe. They will, no doubt, be satisfied with a small profit this year, Many of them could not afford to stay on the It is hoped be |