Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-01-25
'Detation and Its Effects
Discussed by Bache,
Dunn and BradStreet.


iast has called the attention of the
country to the action taken by the
lederai reserve bank 10 curtail credit
expansion and the reasons for this
actlon--namely the approach toward
the danger line of credit supply IN
this way the public has become ready
10 be instructed on the whole subject
including that of defiation and its
consequent effects
~ IS of the greatest importance
that the people. especially the bust
Hess public, should understand the
causes of imitation. be able to recog-
hIze us presence, and to steer their
various enterprises TO avoid disaster
Wnen dehatlon actually begins On
rising price market business be-
comes more and more active but
When prices reach the high point and
begin TO decline the contrary is true:
business fails off and becomes no
longer profitable. Undoubtedly, as
Prof. Joseph French johnson said in
recent address. the great influx of
soiu intO this country during the
war ana the use of il to produce null
up1ed credit has stimulated the de-
mand. Increased the number of buy
ers VINO were able to obtain credit
and advanced prices accordingly We
nouof II imitation in this country has
yet reached its peak, but il is none
100 soon to begin to prepare for the
oewnhili expedition which must in
voluntarily and inevitably take place.
! III is true that the abnormal gold re-
serves helped to finance the war but
i; appears that. Immediately upon ces-
satIon of hostilities, commanding eff
tort should have been inaugurated to
cur,ail credit gradually Instead of
That imitation since the armistice
decreasing
IT does not appear that The present
high level of prices will soon begin
TO fall because the shortage of all
xmas OF goods tends to support high
prices and to increase them. There is
stu shortage OF steel. iron machin-
cry, textiles and many other things
especially labor The Wall Street
Journal says: The steel industry is
swamped with orders A shortaee
of 1000. 900 automobiles is claimed
Certain automobile companies can
not promise delivery of cars WITHIN
three TO SIX months. Machinery and
petroteuh prices are soaring, and
prices FOR certain textiles are be-
coming almost prohibitive Paper
- as scarce as IT Tvas during the war
livery consumer is aware = of The
scarcity of food products, especially
sugar"
Danis Review sums ID.
summing up the general business
SITUATION for the week Dun's Review
says. ~iNeE4
Elements that have long been con-
spleuous in the business situation ar.
sun sharply reflected in the persistent
@ ens IN OF many commodity markets.
as evidenced by the continued pre-
pondersnce of advances oyer recess
slons IN, conipre hensive list of !
wholesale qu0ations- Contrasting
Win recent declines in certain food
SUNS prices OF various raw materials |
and manufactured products notwith-
standing theT already abnormal posi-
ton nave risen further and the COM i
petltive bidding that has developed in
some quarters may conceivabiy cause
additlonAl increases, while speculative
purchasing in anticipation of even
higher levels to follow has been a
factor in the current movement, and
although other influences have con-
tribpted, yet the main farce behind
the upward swing of prices. as has
been the case for many months is the |
pressing call for supplies with which
90 meet actual domestic and foreign
requirements With the renewed de-
moFaIization in international ex-
change, resulting in new low records
in remittance rates on leading Euro
peaQ countries, the difficulties of
financing overseas trade are likely to
be accumulated: but American exports
remain heavy in many instances. and
the..vants of consumers here are so
extensive as to stimulate d demand
for goods beyond the ability of man
ufacturers 10 satisfy. Fresh outbreak ks
ins-fhe ranks of labor, while fortu-
nately not attaining serious proper
tioyfs, have imposed added restraint
on operations in some industries, and
ths- shortage of cars that is nearly
everywhere complained of, and which
has impelled freight embargOes on
some systems. is another obstacle to
thefulI employment of productive ia 4
cilities. With such elements present,
ana with the widespread extravaganza
in buying, II is not strange that prices
are sustained on an extreme basis,
and thai predictions of continued adj
wages are stu rather common. Yet
recognition that the price situation
holds disquieting possibilities is be-
coming more general and the fact
that defiation must sooner or later be
Witnessed is not disregArded.
Report sy Brads,Teet.
BradstTeet's says:
"A Speeding-Up of manufacturing
output. increased buying from 1obpers
and sanguine views as to the future
at leading western and southern
centeTs some slight quieting down.
particularly in textile purchases at
a few primary points and an increas-
ing projection of the discussion OF
money market and exchange condi
tiOns into general business are
among the salient features discerni-
BILE in the weeks reports. Every
line of trade. of course. is more active
than year ago when uncertainty
ruled as to- the future of both. de-
mand and prices. but il is significant
that, while spring trade is esteemed
aecure and scarcity talk as TO current O..
supplies continues in nearly every
line there IL more dtspoSitio to dis
cuss the further future with eye
10 possible price reVisi3hs-
The large ma iority of reports as
TO retail, trade indicate fun buying
for this usually quiet season. this
being stimulated by clearance sales
WHICH are well -patronized as a rule.
This stimula ed demand. by the way.
prevents thorough weighing-up OF
the extent to which popular buying
is likely TO respond TO the numerous
public exhortations To cut down the
volume of what have been termed
Unnecessary purchases. and clear
view as 10 this is not yet OBJ
tainable. though emphasis is still
given TO the view that recent ad-
Nances in primary and secondary
lines. especially in textiles will not
lie fully reflected at retail until next
fall or beyond.
some easing of commodity prices
is likewise attributed TO This cause,
but il might he noted that car short
ages and embsrgofs due to heavy
SHOWS. are charged with the weak
ness in grains. Strength in food ami
NAL prices partially offsets some de-
cIines in other farm products. nota-
bly, cotton. and in some dried fruits.
hut the easing in the weekly food
index number is slight. and the great
perhaps significant that Very high
prices were paid this week for high
grade, fine foreign wool at auction,
while lower grades We're rather
neglected. The hide and leather mar
kets are without much price change,