Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-09-26
BANKERS ARE QUOTED
ON PR|CE-CUTT|NGV VIEWS
From the Wall Street Journal.

From the Wall Street Journal.
Announcement of a reduction on all
Ford cars has caused much interested
discussion in banking quarters. While
ahere is some difference of opinion
Among bankers, they are practically
agreed that there will be no return to
pre-war prices for years II there
were no other cause for hlgh prices,
the heavy taxation that business is
subjected to, they say. would prevent
any general slashing.
The action of Mr. Ford simply rep
resents the eccentric ideas that have
made him famous" said one banker
sThere will be no general price cut
Ting as drastic as that just inaugural
ed by him. Some recession of prices
would be a great stimulant to bust
ness. 1t is expected by economists
and would be welcomed by bankers.
The present recession in prices is
vie result of wrong thinking of two
Years ago. Immediately following
TAe armistice business men were busy
predicting slump in prices and re-
fused to buy. In the early months OF
1919 we had slack times because mer-
chants refused to buy what they need
ed Last summer they found their
Shelves bare and there was rush to
place orders. The demand far ex-
ceeded the supply and the inevitable
happened. Prices shot upward; in fact.
they became so unreasonably high
that people again refused to buy. We
had late spring and panic In ia
pan. These things combined to fill
the air with pessimism and the fright
ened merchant again began to reduce
prices and to cut his purchases to the
bone. The trouble with this policy is
that stocks are again running low and
may cause another runaway market
to the injury of the general public"
May Be Twenty Years Away.
Another banker thought that it might
be twenty years before prices reached
the pre-war level He said:
There are great opposing forces at
work in the worlds market today. One
is working for higher prices and one
for lower. The force working for
lower prices is a slump jim business.
When demand falls off prices tend to
fall to lower levels. Then there is the
credit situation. Money has been so
hard to get that great deal of work
has been postponed. That in turn in
creases the supply of labor and is max
ing for an easy labor situation. That
is healthy.
'On the other hand, should prices
recede materially it will be possible to
do the same volume of business with
less credit. thus easing money condi-
tons. With money conditions easier,
the railroads Will be in the market for
large loans to buy equipment, etc.
Not only that. but Europe would
be able to get credit here for hundreds
of millions which she badly needs, but
which she cannot get now, because all
of our credit is tied up tight. Europe
will buy all the surplus we can pro-
duce for many years if she can get
credit. Then, again, we are sadly in
need of more building Thousands of
people would build if they could get a
little credit; thousands of others need
no Ccedit. but are waiting for prices to
receIe before beginning to build"
A third banker expressed the opin-
ion that there would be no general re-
cession in prices until labor costs are
reduced.
1t seems to be generally agreed
among authorities that business will
continue good for several years, re-
CARELESS of whether the course of
prices should be upward or downward