HIGH COMMODITY PRICES

Press, Volume LXXXVII, Issue 26393, 11 April 1951, Page 9

HIGH COMMODITY PRICES

AMERICA’S MOVE FOR CONTROLS

"In the long run over-high prices can only lead to chaos, because the eventual adjustment is too severe,” says "Jobson's Investment Digest," Sydney,- in a recent article on United States resistance to high commodity prices. "America realises the dangers of forcing up values to a ridiculous level by indiscriminate buying. That is why, apart from natural instincts to buy cheaply, she will try to influefice stable commodity markets as far as possible.

“With so many nations anxious to stockpile. or even buy for industrial requirements, Britain is worried about the trend of commodity values," it adds. “Manufacturing from Imported raw materials, Britain is finding she is exporting her finished goods at below replacement costs. For this reason, she is anxious in one respect to support America in the demand for fixed prices and allocations, in spite of certain other disadvantages. “Britain’s export policy and her attempt to keep prices down for raw materials has caused a substantial black market. Compared with the fixed sterling prices (in brackets) .copper fetches £450 (£202), zinc £350 (£lsl),'and lead £220 (£136) on the free market. Aluminium £250 (£124) and nickel, in small parcels, £lOOO to £2OOO (£406) a ton are two other examples where fixed domestic prices are out of all proportion to world values on the free markfet.

"All these factors add up to a sudden possible adjustment of internal prices because Britain has been exporting at prices which have been too low. With replacement costs- running so high, any prospect of stability in world raw material prices will be welcomed.

"Stockpilers and manufacturers naturally want, and will work for, low raw material prices. But in times of acute demand, where scarcity bumps up prices, the producer is anxious to prolong the boom. While America wants to stockpile 350,000,9001 b of wool—or 60 per cent of the five producing countries' exportable surplus of the particular grades required —producers believe they would be foolish to agree to bargain prices. Normal world demand for wool is increasing and another war quite possibly could further Increase the demand."