HIGHER PRICES

Auckland Star, Volume LXV, Issue 277, 22 November 1934, Page 18

HIGHER PRICES

INSPIRED TALK

SILVER DEVALUATION. (By PAUL MALLON). WASHINGTON, October 6. Those in the know here think that President Roosevelt's promise of a reasonable increase in prices is the most important news that has come out of the AVhite House in months. The casual way in which it was made heightened the tremendous implications behind it.

No one needed a spyglass to see that it meant that the New Dealers were resuming a technique that they dropped last spring. Until then they had all been predicting higher prices. It helped business. If consumers believe prices are going up, they will buy. And when a President promises higher prices, the consumers are very likely to take his word for it, especially when that President has all the powers that Mr. Roosevelt now has to make his prophecy come true.

The drought and the price-boosting results of the N.R.A. are supposed to have been the cause of Mr. Roosevelt putting the price question in the icebox about six months ago. The fact that lie is bringing it out now is more than a hint that lie is going to warm up the cold potatoes, and—what is more likely —that he will throw some more lard on the skillet.

What kind of lard it will be is not hard to guess. It could be further gold devaluation or silver devaluation. Both have to come some time. The logical tiling to do would be to devalue the silver,dollar to the same extent that the gold dollar has been devalued. That would net the Treasury a cool theoretical profit of £3,600,000, aside from its hypodermic effect on business.

Then the President would be free to squeeze about nine cents more out of both the gold and silver dollars at any later time when he may think it advisable to create a fresh restrained inflationary psychology. Tonic of Talk. But those things are really not immediately important. The big thing is that the White House has revived the talk about such things'. That will do more to stimulate buying than any subsequent, monetary legerdemain.

The mere fact that the President luts it be known that he thinks priccs should be higher will make priccs higher. Indirectly, it tells people to buy) now and avoid higher prices later. That increases demand, and an creased demand will automatically increase priccs; for, regardless of all you have heard from the theorists, tlie'good old law of supply and demand is still in effect. And don't think that the White House did not know that when it let the price statement out.

Another hidden point in Mr. Roosevelt's clever strategy is that he selected the most opportune time of the year for the price warm-over. This is the buying season, not only for individuals, but for business houses.

But ono thing should not be forgotten: that is that Mr. Roosevelt wants a reasonable advance. If profiteers take advantage of tho situation for gentle extortions, they will be merely killing tTieir own game, because the President will undoubtedly then be compelled to put the price policy back in the cooler. —(N.A.N.A.)