The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-10-05
WHAT WILL THE HARVEST BE?

alnfSst everywhere from their recent
levels, and the questions now most
frequently asked are: How far will
the decliQe go? How long will it con-
tipue?
In some commodities, says the Me-
chanics & Metals National bank, prices
have probably reached the lowest
point they will touch on the present
movement, and in a few instances in
which the decline has been drastic,
there will doubtless be a recovery.
But in considering the average level
of prices, it continues, the present de-
cline cannot yet be said to have come
to- an end. In many lines in which
prices have not yet been reduced there
has been a slowing up of business and
a piling up of>stocks in the hands of
producers. If buying is to be stimulat-
ed, price reductions in these lines are
inevitable. Credit is no longer easily
available for the purpose of holding
goods off the market in the hope that
prices will advance or recover, and
the federal reserve board is strongly
opposed to its use at present for such
lifting. Prospects of the greatest cot
ton crop in six years. and OF the great
est total of coral crops ever reached
in this country. with the single excep-
ton of 1915, are lowering the cost of
basic comm ODDITIES.
Yet the desline has probably passed
its most drastic point. declares the
bank, and further declines are likely
to be less violent, 1t is not unlikely
that altered credit and monetary con-
ditions have left prices on a perma-
nently higher basis and that they will
not in many years, barring very
great increase in the production of
goods, return to the levels OF 1913.
1t has sometimes been asserted that
prices cannot fall further because
costs of production are so high. This
is partly true and partly untrue. Costs
Of production do not directly control
prices in any one year. Prices are
always controlled by supply and de-
mand. If supply become too great, or
il demand suddenly fall, and goods
pile up in the hands of producers and
dealers. prices must be cut sufficient
ly to induce buyers to take them, ir-
respective of production costs. But if
the price arrived at fall below the
costs of production of some manufac-
turers. they will lessen production in
the following year. and the, total sup
ply of the goods will be curtailed, thus
raising prices again in spite of the fall
in demand. 1t is for this reason that
we can expect a recovery in the.prices
Of some commodities which have
fallen very violently.
But It is not to be overlooked that
costs of production themselves will
fall to some extent. These costs may
be divided into raw materials, machin-
cry, factories and other fixed capital.
borrowed capital and credit, trans
portation, taxation, and salaries and
wages. Raw materials in many in
stances have already been falling even
more rapidly than finished products.
The mutual effect of prices and
wages upon each other is an impor-
tant consideration. Insofar as per-
centage profits have been abnormal.
we must expect that lower prices will
simply cut into these. and most lines
must not expect a continuance of the
same earnings that they have been
seeing. A drop such as we have just
had, however, cannot be without its eff
feet on labor.
1t is true that the American Wooden
company and the Ford and Franklin
companies have announced that wages
will remain unchanged in spite Of the
cuts made in prices; but in the long
run, and for industry generally. price
declines must affect labor in one of
three ways: Either there must be in
creased efficiency and greater pro-
duction per man, or there must be q
reduction in wages, or men must be
thrown out of work. All three effects
may take place to some extent; in
fact, they are already taking place.
Employers report a more satisfactory
attitude on the part of labor. and find
in many instances that after laying off
a portion of their men. those remain
ing have maintained the total produc-
ton of the plant at the old level. If
| Increased Individual efficiency were to
be effected generally, and were to go
far enough, It would be better for ev-
cry one all around, capitalist. laborer,
and consumer: we could have good
profits and high wages with low
prices.
But IL this increase in efficiency
does not occur to the necessary extent,
and IL wage reductions are strongly
resisted, as they may be, then capital,
which must have a living wage as well
as labor, will be compelled to lay off
men IL 1t cannot make a profit pay
ing present wages.