New-York tribune., 1919-02-04
City Bank Expects
No Big Drop of
Commodity Prices
Decline of Selling Figures
viii Follow FalI-off i'm
Costs-World Shortage of
Goods a Stabilizing Factor

The National City Bank, in its
monthly Circular, minimizes the fears
OF rapidly falling prices and points out
that prices cannot fall to the pre-war
level as long as costs remain high. II
aralyzes the present situation as fol
lows:
Business always hestitates in the
face of fundamental change. 1t came
nearly to a dead halt when the war
broke out, although all experience had
shown that war invariably causes great
industrial activity and high prices
The transition period from war to
Men wait to see what others do. Prices
are expected to fall; how much no.
body can tell but the natural impulse
is to delay purchases.
'The first cut all around is into the
profits of the seller, and profits are
affected not only by price reductions
but by reductions in the volume OF
business, which increases the percent
age of overhead. After profits are
eliminated, as they are already in some
see how costs can be cut, and this is
the fundamental question now, for on
the whole costs will govern prices.
''On the whole it does not appear
probable that general commodity prices
will continue headlong decline to
the level of before the war. We see
no reason to alter our previously eX-
pressed opinions that the tendency
after the end of the war would be
downward, but that it would be i'm
possible to reduce costs rapidly to the
old level. They are not going to be
reduced rapidly in other countries.
Freight charges have just been largely
reduced on the ocean, but not to pre-
war rates, and railway charges are not
being reduced at all. Profits are beng
sacrificed and production curtalied'
but the fundamental conditions which
are necessary to prices much below
those now existing have not been es-
tablished here, still less in Europe.
"Finally the great underlying fact
in the situation is the world-shortage
CT goods, following four years in which
production has been devoted manly
to war supplies, and the need OF ra"
materials and equipment for recon
struction."
While doubling the ability of the
government to do great deal to re-
lieve the present situation, the Ma
tiional City Bank remarks:
There is greatly needed at this time
a large and enterprising pubnc pollcy
which would organize and coorolhate
the activities of national, state ana
local governments, so as to create
large amount of work for the coming
spring and summer. After that 1t IS
safe 10 saw that the situation Will take
care of itself, provided unemployment
can be averted in the meantime. Inc
presuige and cooperation OF the ma
tional government are required 10 oe
velop such movement, and the good
efforts of Secretaries Lane, Wlison ana
Pedfield should be not only supported
but enlarged and made natlonal POI
icy. The railroad and utility companies
should be enabled and encouraged TO
make improvements now, when iapor
will otherwise be idle and It's potential
valnc totally lost to the country. Ex-
tra costs are nothing compared with
total losses and little compared with
war eyrenditures, and this is the view
that communities should take Of the
proposal. OF course, the programme
should be elastic, so that no more
work would be undertaken than neces-
sarv for the purpose, but unemploy
ment should be prevented by public
spirited. nation wide movement"
The bank calls attention to the odds
which deter the investor from new en-
terprises at this time: "lf develop
ments are against him and he loses,
the loss is all his own; if he is sue
cessful, the government may claim so
or so or 80 per cent of the profits"