Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-10-31
WHOLESALEPR|CES
NOWAT 1917LEvEl

Mechanics and Metals National Baak Of New
York
During recent weeks signs have
been accumulating that the present
rapid downward movement in COM
modify prices may very shortly come
to an end. Just as, few months ago,
prices were bid too high because sup
plies were underestimate. so now
there is a possibility that they will
fall too low, and that some prices
have already fallen too low. through
underestimation of demand. Any fur
Their declines in wholesale prices dur
ing the next few months are not UNI
likely to be offset by recoveries in
other lines.
This. however. applies to wholesale
rather than to retail prices. These
have not come down to correspond
with wholesale reductions. Retailers
who have taken in stocks a the high
er prices are reluctant to sell them for
less than the expected profit. and are
trying to hold off reductions save on
goods bought at the reduced values.
In some instances they even continue
to offer at the old price goods which
they have bought at reduced whole
sale prices. Such policy cannot long
continue. 1t is possible that retailers
in some lines may be able to main
tain prices on goods bought at the
higher levels until such goods are
worked OF, but until retail prices re-
fleet approximately the decline al
ready seen in wholesale prices. the
not have been completed.
The very extent of the break in
wholesale prices up to this time Is an
indication that it has about run its
course. One hundred and six articles
at wholesale dropped per cent dur
ing September. the greatest fall for
any single month yet recorded From
the first of May to the first of Sep
TENDER the total decline in prices
reached approximately 20 per cent.
period of only five months that has
been recorded for at least genera
ton.
At I0I. Level.
Wholesale prices are now at almost
exactly the same level as at this time
three years ago. Leading agricul-
tural products have suffered most of
cents in July. has fallen to half that
figure. Corn is less than one-half its
high price in the early part of the
year Sugar has fallen to about one
third of its price few months ago.
One of the leading causes of the
price decline has undoubtedly been
the inability of consumers to continue
paying the high prices. combined with
their feeling that prices were I'M
reasonably high even when they could
seems at first glance remarkable that
the drastic fall in prices has not slim
ulated buying.
In manufacturing and merchandise
ing lines demand is more hesitart
than before; There is only hand-to-
explain from a purely psychologist
than on objective eco
nomc grounds. In the belief that
prices have still further to fall. a
large number of consumers are hold
ing off in all but their most imme-
diate needs. Dealers take only as
much as they must to keep going.
as they do not want to have stocks
on their hands that may shrink in
value.
bring an immediate increase in buy.
ing, therefore, is not only natural.
but inevitable. A period of dullness
and hesitancy always follows a period
Of sharply falling prices.
Fighting Further Concession.
Though sharp reductions have
brought no influx in buying. whole
resisting further declines. on the
ground that they would be senseiess
and only brighten buyers the more.
This position is quite defensible.
III precedent counts Tor anything. IL
may be pointed out that, while prices
have fallen more than 20 per cent
in the last six months, it took them
twelve years to fall less than SO per
cent to pre-war levels after the Ma
poleonic wars. Two years after the
civil war. also. when prices had
fallen i2 per cent from 1855 to 1866.
4 recovery followed the break. and
prices did not reach a so per cent
decline from 1865 levels until more
,.... IL years later.