PRICES STILL FALLING

Wanganui Herald, Volume LIII, Issue 160812, 20 November 1920, Page 11

PRICES STILL FALLING

CONDITIONS IN AMERICA

ROTORS -AT PRE-WAR COST. CAUTIOUS ATTITUDE OP PUBLIC. Another sensational wave of price cutting has swept over the country, leaving many commodities substantially cheaper than a month’ ago, Messrs John Dunn, Son and Company, of New York, state in their market -letter of October 4th. The inciting cause, apparently, was the action of the Ford Motor Co. in reducing prices for their product to approximately the pre-war basis. Many other makers of automobiles have followed suit -• by reducing prices to some extent. The two large mail-order houses in Chicago immediately announced substantial cuts in prices of a great variety of goods, and' retail dealers quite genferally are advertising special sales, under cover of which they are endeavouring to rid themselves of high-priced stocks with the least possbile loss.

As each month passes it becomes clearer that a real period of deflation is under way, although the actual necessities of life, excepting perhaps clbthing, are as yet scarcely affected. Prices of food Rave changed but little to the consumer, while fuel and rents continue rather to advance. All textile goods, cotton, wool, and silk have fallen very, decidedly \in value, as have hides and leather. Shoes are consequently somewhat cheaper, but still double, what they were in 1916. There Is ho real lack of demand, but the public has come to expect lowef prices, and is delaying the making of purchases as long as possible —■ a very decided change from conditions prevailing six months ago, when eager spending was the rule. The reasons for the present lull in business may be- summed up as a waiting, attitude on the part of the consuming public in combination with banking restrictions.

LOWEST INDEX SINCE MAY, 1919. Another very heavy decline Is recorded in Bradstreet’s Index number of commodity prices in the United States for August. The figure for September 1, 17 dollars 97.46 cents, shows a decline of 4.5 per cent* from that of August 1; the decline from the peak point of February 1, 1920, was 13.9 per cent., and the September 1 number was, in fact, the lowest recorded on the first of any month since May, 1919. It is still, however, 106 per cent, above August 1, 1914. Weakness in textiles, especially in cotton and cotton goods, and in the provisions group, with smaller declines in hides and leather, metals, vegetable oils, and naval stores, offset some strength in dried fruits, miscellaneous products, and coal and coke. The month saw a heavy break (10 cents) in cotton, resulting in lower prices for cotton manufactures, and also saw weakness in groceries, prominent among the latter being sugar, with a drop of 6% cents, tea 5 cents, coffee 2% cents, and rice 2 cents. A slight downward turn in building material, due probably to -the check to construction, was an event of the month. Coal and coke were stronger, reaching, in fact, new high record levels, and a number of foods, notably dairy products, advanced, as did meats. No fewer than 10 out of 13 groups declined in August, and 40 Individual commodities moved lower, while 26 advanced and 40 remained unchanged. A Reuter telegram from Manchester, dated Sept. 22, states that the Amoskeag Manufacturing" Co. had announced a'reduction of 33 1-3 per cent in the price of manufactured cotton goods. The present weekly -production of the company, which employs ten thousand operatives, amounts to four million yards. Explaining the reduction, the company states that it fears that the cotton market, which is already unsettled, owing to a heavy cancellation of orders, might reach a condition similar to that which compelled companies In the woollen line to close down.

GRADUAL DECLINE EXPECTED. The markets report of the National Bank of Commerce states that wholesale prices continue to move downward in many important groups of raw products, and of semimanufactured materials for use In further „manufactures. Declines have been passed on to the finished product in some lines. Unless untoward social and political developments. should take place In Europe, however, it now seems likely that in the jcase of most commodities the period of rapid price adjustment has passed, and that fluctuations from now on will be through a gradually narrowing margin. Present price movements, however, must be interpreted with the greatest care. Cases in point are those commodities the prices of -which appear superficially stable, but in which, as’ a matter of fact, - almost no business is being done. In such, cases, actual values cannot be known until trading operations are resumed. INTERNATIONAL CONDITIONS. The condition now prevailing in the United States of declining prices and of consequent hesitation on the part of the buyer, whether he be manufacturer or. ultimate consumer, prevails in every important country of the world. The British textile industries have felt not only a slackened domestic demand, but the effects of curtailed buying in distant markets, especially India. Tbe boot, shoe and leather industries of the United Kingdom ffre now in a state of stagnation. Ports as widely scattered as the Piraeus and Barranquilla are congested with goods bought in'large quantities at the flood-tide of' 'post-war prosperity. These goods must now be handled on over-burdened railways, in markets disposed to be critical of prices. The rest of the world has become accustomed to the absence of the countries of Central and of Eastern Europe as producers and consumers of manufactured goods, but their continued; inability to buy certain

classes 'of raw materials, is being Increasingly felt. BANKS AND FAILING PRICES. The Federal Reserve Board has declined to extend special financial aid to’the cotton growers in their efforts to maintain prices. Governor Harding, 'who received a committee representing the American ‘Cotton Association, told them it was contrary to the policy 'o£ the board to take action that .would, either sustain or depress the price of any particular commodity. He advised them, to make the best possible use of available bank credit and facilities and to make their arrangements for marketing their crops through the accepted financial channels. He suggested further the formation of an export association 6f cotton growers for the 'development of" markets abroad. .Governor Harding pointed out that if the demand of the cotton growers for- special accommoda-' tion were granted the resultant tying up of'credit would tend to offdet measures now being taken to reduce credit expansion, and would lead to higher costs of production.