The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-02-05
TIME FOR A HALT.

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commodities are inconsistent with this
country's welfare. it is declared by the
National Bank of Commerce in New
York in its magazine, Commerce
Monthly. The bank points out that of
twenty-siX staple products seventeen
showed a gain last month over De-
cember prices, while only four showed
decline. Moreover" it adds. "onIy
in the case of one or two increases
can the rise be ascribed to causes
Operative in the market for that COM
modify alone. For a considerable
period, the volume Of commercial and
financial transactions has been out of
proportion to the physical volume of
production on which they were based.
Steadily rising prices have been re-
Election of this situation
The bank. while not predicting a
definite time when price. readjustment
may be expected, maintains that the
process need not mean disruption to
business.
IF, when the tide turns" says the
bank, REIMBURSEMENT be not too long
resisted and production be not too
much slowed down, and if the situa-
ton be flexible and competitive, we
may expect to meet the reaction with
out disaster. The country is not so
we'll braced now for reaction as it was
at the time of the armistice, but so
many of our major industries are in
an exceedingly strong position, and
our banks are as a whole in SO excel
lent a condition that we should view
the prospect without undue apprehen-
sion"
The bank continues:
Withdrawal of the present extern
sions of credit to support exports to
Europe would soon check the present
abnormally one-sided trade. This
would necessitate our domestic, mar
ket'S absorbing three or four hundred
billion dollars worth of goods each
month which our market has not had
to absorb during 1919. With goods
thrown back on the domestic market
in this volume a relaxation of the
strain in our commodity markets
would follow. Two possibilities would
then be opened. On the one hand, we
might have a speedy readjustment of
prices and wages and a revival of
business activity on a lower level. On
the other hand, if efforts were made
to resist price reduction by artificial
means, we would be exposed to the
dangers of painful period Of real
business depression.
When this readjustment comes, the
business men of the country will have
opportunity for policy toward labor
which will go far in making for indus
trial peace in the years that follow.
In so far as balance sheets permit it,
business men will find it wise to let
nriNoS 6nUn firSt without q III N O
too vigorous efforts to reduce wages.
The natural course of events will lead
to substantial wage reductions in time.
However, we cannot expect to see
wages recede as rapidly or as far as
prices. because the elimination of i'm
migration in recent years has left our
labor supply relatively short. Even
without reduction in wages, labor costs
per unit of output will be reduced
with the restoration of shop discipline
and the cessation of overtime work.
The chief I use of high, prices out
lined by the bank is the shortage of
supplies for the domestic market, due
to the drain upon American produc-
tivity by Europe's demands. The
shortage has been accumulated by cur
tailment of output in many lines fol-
lowing the armistice. Other causes
ll6 VI Oil
amount of credit by government loans
for destructive purposes and extrav-
agance by the public in a post-armi-
stice relaxation from wartime econ
omy. Concerning the relation of the
value of gold to prices, the bank has
this to say:
The great change in prices in the
United States has been due. not to a
fall in the value of gold, but to a rise
in the value of goods. AT the present
time, forces are at work tending to
make the value of gold rise rather
than fall. High prices and high wages
are curtailing gold production, and
with diminished production there has
come also an increased industrial con-
sumption of gold. At the present time
the arts and industries are consuming
more gold in the United States than
our gold mines are producing. If no
other factor were at work, this would
mean in the long run a fall in prices.