New-York tribune., 1918-11-08

tSCLoIk IS DdSCU NPVA a. AoVASA ~~AA
fused notion of just what happened
during the war. A great deal of
the belief that prices of commodi-
ties will quickly and drastically fall
is based upon the belief that the
great rise in prices came Immediate
ly with the opening of the wars
demands and that this rise will be
promptly cancelled with the cessa-
ton Of this demand. AS a matter
of fact, there was no notable rise in
prices in this country until the fall
of 1915, nearly q year and a quar-
ter after the beginning of hostili-
ties. The great rise took place in
the eighteen months following, or
just about up to the time of our
entry into the war. There has been
no very notable rise in prices since.
This is quite contrary to general
belief. The prices of most individual
commodities, like wheat, steel, cop
per, and many others.a reached their
maximum in the summer of 1917,
before the demands occasioned by
our participation could have any
very notable effect. Corn and cotton
were quite marked exceptions. They
reached their high year later.
Neither of these was brought under
the price-fixing regime. The infer
ence is, therefore, that price-fxing
exercised a powerful check upon the
price level. That it undoubtedly did.
But there is food for thought from
another field.
The great rise in prices in this
country did not begin until the
heavy exports Of gold, which fol-
lowed the outbreak Of tho war, had
ceased, nor until the loss sustained
had been recouped and the piling up
of a surplus had begun. These
heavy gold imports ceased in the
spring of 1917. 1t is very inter-
esting fact that the course Of prices
and the course Of gold shipments
throughout the war followed in a
broad way quite parallel lines. It
is our belief that this coincidence
was not fortuitous, and that the
factor which was here at work will
likewise be one of the powerfully
determining influences on the course
of prices in the months to come.
From another point Of view, the
recent course of prices has not fol-
lowed the actual expansion Of the
Currency" using that term in the
broadest sense, as closely as might
have been expected. II we take
bank loans as q barometer of the
actual expansion Of the circulating
medium, we find that, for example,
the loans of the national banks
stood at little over six billions
when the war opened in 1914. They
had risen to only $s,70O,00O, 900 in
April of 1917. At the last detailed
statement, that for August 81, they
stood at close to $9,50O,00O,O0O. That
was a total increase Of only little
more than half. But if we add in
the government securities held,
which are strictly in. the nature Of
loans, we find different story. The
total of these holdings at the end
of 1914 was little over one billion
dollars. Bhe total now is two and
q half billions. Add to this the two
billions Of newly created rediscounts
Of the Federal Reserve banks, a
large part of which came from
these same national banks, and we
shall see that the actual increase in
bank credits by the national banks
was we'll over six billion dollars, or
an augmentation of close to 100 per
cent. This corresponds very rough
ly to the actual increase in the
commodity price level, as measured
by Dun's and Bradstreet's indices.
Here again it is notable that prac-
tically none of this expansion had
begun to take place as late as Sep
tember, 1915.
A great many persons have the
impression that our own war de-
mands have greatly augmented both
production and trade. In point of
fact production in many basic lines,
as steel, copper, cotton and the
cereals, has been this year either
below 1918 ar ovI,, ol>o,,k A.