Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1918-12-28
Price ReadjuStment
BY b. NJ ANDERSON JR, PHI d.
of the National Bank of Commerce In New York

every effort should be bent toward
increasing supplies.
We need not give serious consid-
Grafton to the idea that a more legal
fiat, naming a price at which men
shall buy and sell, would be effica-
cious. Price-fxing, to the extent
that it has been successful during
the war, has been Successful only by
virtue of q control and rationing out
of the supplies. Price-fixing as a
permanent policy is indispensable in
any case. The magnificent loyalty
of the American business man, and
the heavy pressure of public opinion
under the stimulus of the war, have
made businessmen submit to 1t as a
temporary measure. But 1t would
do great harm If long continued"
The world has been forced to
reckless buying by the emergencies
of the war, and whatever was nee
essary for carrying S6n the war, the
governments have bought. Civili-
zation itself was at stake, and we
did not stop to apply accounting
| methods. But reconstruction" is
in large degree a business matter,
to be carried out by private enter
prise, even though aided by govern
ment credit. Only q government
can afford to make expenditures
that will not pay-and governments
cannot do it indefinitely. We may
expect heavy buying to continue of
. foodstuffs and things necessary for
the life and health of the peoples of
Europe, but the buying of materials
| to be used in construction, manu-
| featuring, Tailroading, or other OPP
erations of that kind may be expect
ed to proceed on a hand-to mouth
| basis until prices have dropped suf-
| ficiently to induce businessmen to
| feel that a fairly stable level has
! been reached.
! Much of the consumption demand
| of the American people, repressed
| by war time prices, will be effective
as prices go lower. The past un-
satisfied demand for food and day
by day luxuries, for much clothing
and many other things, is water
which has gone under the mill. II
will never affect future prices. But
part of that past demand for cloth
/ ing remains. And there Is doubtless
q large volume of deferred demand
| for household furnishings, pianos
automobiles, ETC., which only awaits
lower prices to become effective,
With the release moreover, of the
current production of steel, copper
| and other basic raw materials, now
so largely devoted to war purposes
and with the releAse of large num-
bers of laborers now engaged in war
work, q substantial amount of the
most urgent construction work will
begin, while with the decline In
wages and prices of supplies, we
may expect a very great volume oi
construction work to be promptly
undertaken, keeping laborers and
plants actively employed.
Falling Prices Stimulate Demand
There is nothing in the argument
above to justify the suggestion thai
a period of slack industry must in.
/ tervene There is tremendous vol.
ume of unsatisfied demand waiting
for both labor and goods at lower
prices. There is, in fact n scale oi
demand prices both for labor an6
for goods at which supplies will bt
taken off the market as they come
A given manufacturer will take or
ten more men If he can get them a.
a slight reduction of wages. If ht
can get them at q lower wage, he
will take on twenty. If he can ge'
them at a still lower wage, he will
take on thirty. With copper ant
steel at present prices. he will buy
only moderate amounts; but will
each drop in the prices of these
commodities. he will increase the
amounts which he Is ready to pur
chase. AS prices drop, the more ur
gent demands will be satisfied first
and then as prices drop still fur
ther. less urgent demands will bt
satisfied. When levels that are ex
pected to be reasonably stable ar
Preached, a very great volume of de
mand will take up all supplies tina
come into the market. No arbi
trary action should be taken to has
ten this process, but none should b,
taken to impede 1t.
In the interests of active business
it is desirable that this relativel!
stable level should be speedil!
reached, and 1t is undesirable tina
palliative methods should be uset
unless actual unemployment ap
pears.
Summary.
In summary: Artificial control o
business and prices should be dis
pensed with as rapidly as possible
At the earliest possible date, tn,
business man should he free Il
make his plans and contracts will
reference to accounting principles
rather than under government di
rection. Neither price-fixing nor {
forced expansion OF credits can pre-
vent the fall in prices which the re
turn to peace conditions inevitably