The Lancaster news. [volume] (Lancaster, S.C.) 1905-current, 1919-08-26

(By Paul Clay, in Forbes MAGAZINE.
1t has been generally believed that
commodity and goods prices were new
er coming down. This belief has been
taken so seriously, even by those who
exercise intelligence in most matters
that 1T is worthy of examination.
1t is easy to see how the idea came
to prevail. Producers and merchants
have been praching the doctrine of
permanent high prices in order to in
duce the public to buy, and they have
brought to their assistance great
army of advertisers, writer's and So
called economists, whose opinions are
for sale. Besides this, some few econ
'mists of the best intentions have been
over-awed by the apparent strength
OF prices. and have come to accept
honestly the theory.
Wall Street, too, simply devours the
theory that prices are to remain at
the present level, for if this be true
1t means immense industrial profits
Tor evermore, and continued bull
market in which IL will always be easy
TO make money. a student Of finance
thus summarized the opinion of the
street:
Prices have become acclimated to
the present level, and they are going
TO stay here or go higher. You will
never live to see them come down.
The money and wage imitation will
not let them down. Indeed / would
not say that prices have gone up, but
rather that the value of the dollar
has gone down. You pay twice as
much for anything you buy, but every
one is getting 81 of income where he
used to get 81, so that it is an even
thing Stock prices are about the
only ones that haven't doubled; but
stocks are earning double what they
were before the war, and they have
got to double their dividends Stocks
that used to pay 5 per cent must pay
10 per cent, and when this becomes
the rule stock prices will double"
Everywhere the wish is father to
the thought and serious examinations
of the question whether prices actu-
ally Will come down or not are con-
spicuously lacking. Let us do the
unusual and unconventional thing
namely, bit Of sober thinking upon
the subject. Thinking in regard to
prices is unusual because nine people
out of ten take their opinions ready
made from the captains of industry
and finance; and it is unconventional
because under existing conditions It
is to the interest OF both organized
labor and organized capital that
prices should stay up. Both can
make more money If they stay up.
and enough more to live higher than
before the war
But we cannot see into the future
by looking at the wishes OF various
interests. There are definite business
influences or economic forces which
govern prices, and through an honest
look at these some rather broad. but
reliable, conclusions can be reached
at the outset.
Perhaps the best known of these Is
the law of supply and demand. This
law, or rule, is merely an expression
OF the experiences of all ages and
peoples. 1t means simply that when
the supply of a given article exceeds
the demand for 1t, prices will go
down, and vice versa There have
been trusts and monopolies and cor
ners ever since Joseph went down
into Egypt to buy corn; but while the
rule that supply and demand governs
prices can be temporarily interfered
with, 1t always comes back and exer-
cises its dominating force.
The biggest single factor in deter
mining supply is plant capacity
meaning the extent OF the plants or
factories built and equipped for the
production OF a given article. Wheth-
er or not a plant is idle at the mo-
ment is almost immateral in consid-
ering future supply. because there is
always such strong inducement to
Keep producing plants operating as
much as possible. When they are
idle the owner gets no return on the
money invested in them. and besides
this they deteriorate physically at the
rate Of to per cent per annum.
Even where there are agreements 10