Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1920-11-19
SHRINKING G

$HRINKING PRICES,
When war broke ont in Europe
everyone knew that commodity prices
would advance sharply.
When the energies of several hundred
million people were suddenly diverted
from the production Of peace-time
commodities to the maintenance of a
gigantic work. Of destruction there
could be no question as to what
would follow. 1t did not need even
a reference to the facts of history to
convince n of the fact. Such refer
ence alone would have been convinc-
ing, for no great war hiss failed to
lessen the supply of. commodities, and
consequently to enhance prices. But
if there had eve been another war,
it was quite evident what the effects
OF this n would be.
1t was plain that the upward ten
dency in prices would be felt, not
alone in the countries involved in the
war, but in the United States, whose
products would be in greater de-
mand because Of the failure of pro-
duction, across the seas And when
the United States became involved
and it became necessary to assemble
and arm it's military electives, it
was manifest that this tendency
would become more acute. 1t was
quite clear, also. that the higher
price levels would be maintained for
some time after the war, because
reimbursement could not follow i'm
mediately upon the conclusion of
peace.
II sensational price advances were
certain to accompany the war, II was
no less certain hat the conclusion of
peace would sbe-folowed, sooner or
later, by very great price reductions.
Prices would be maintained at their
high level only by the use Of arbitrary
and artificial means which no nation
was prepared to adopt. and which
would have required the concerted
action Of all the civilized govern
ments Of the world. Price reduction
was certain. and price reduction i.
here. VI
Important price changes operate
with different effects on different
groups. Rising prices made profit.
for those who found themselves
stocked UP with an abundant supply
of commodities for sale. They created
hardships for those whose relation tc
the general market was that Of u
chasers, and whose personal incomes
did not advance with the prices OF
the goods which they were compelled
to buy. In between these groups
there was a vast body Of people who
owned property, but their profit,
were potential rather than actual.
Failing prices have come. and the
effect is reversed. Commodity value.
nave shrunk on t.ne hands of the
holders during the process OF turn.
over. The personal income which wa:
inadequate has increased in purchas.
ing power. Values of permanent,
held property have decreased.
Theoretically the situation balance.
itself. Excess profits are offset by
corresponding losses, and we proceed
as before. Actually there is no sucl
exact readjustment. Price advance.
did not distribute themselves evenly
and the decline is more or less cratic
Some have made profits at both end,
Of the scale. Others have beer
pincl1ed going up and coming down.
One very important element in til.
situation Is the tendency which ha
been CONSPICUOUS all over the countr,
to transmute paper profits int,
cash and spend the proceeds, provid
ing nothing in the nature of q sink
ing fund against the day OF lowe
prices, which was sure 10 come
We're it not for this factor, the worl
of readjustmcnt, though by n,
means simple, would be relieved o
some of it's greater complications
AS it is, a lot of us are doomed to
rude awakening from a Fascinating
dream.
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