The public ledger. [volume] (Maysville, Ky.) 1913-1968, 1921-06-04
GENERAL DECLINE
In COMMODITIES
HAS REACHE DEND
Prominent Banker Says That Violent
General Decline in Raw Ma
terlals Has Ended.

Recent increases in the wholesale
prices fcertain commodities do not
indicate new period Of rising values,
in the opinion of Herbert P. Howell,
vice president of the National Bank Of
Commerce in New York They do,
however, show that the violent gen.
eral decline In raw materials is defin-
itely at an end. Many individual COM
modities will show considerable
further revisions, he believes, but the
general movement has reached level
at which manufacturers may do bust
ness on the basis of their own require
ments irrespective of the market price
of unrelated commodities.
"Of the twenty-six representative
commodities quoted monthly by the
National Ban kof Commerce in New
York In its magazine, Commerce
Monthly" Mr.. Howell points out, six
teen showed increases in May over the
preceding month while four stood still
and only six continued to decline.
"These increases must not be con-
strued as indicating new period Of
rising prices Some of them are sea-
sonal nj character an dothers reflect
a tendency toward sterilization on the
part of commodities which in the gen.
eral decline that began in the spring
of 1920 may have fallen below fair
valuation. The increases are impor-
tant, however, because they demon
strate that the process of liquidation
has reached a point where raw mate
rails are beginning TO react to condi-
tons | ntheir own individual markets,
Normally the price movement of
every commodity is determined pri-
marily by the status of its own mar
ket and that of commodities immedi-
ately related to it. Only in boom
periods or during violent depressions
are prices affected more by the gen.
eral movement than by these individ-
ual factors. What has happened now
is a return toward normal conditions.
Henceforth, commodities may be ex-
pected to flucuate in obedience to the
influences of specific supply and de-
mand.
MANY prices have stabilized. This
does not mean that there will not be
further declines. They may be expect
ed in many lines, and commodities
which have not yet been adjusted will
receive no support from others that
have reached a stable footing. In their
decline, they will not force down COM
modities in which deflation has al
ready occurred.
Index numbers have not yet dis
closed the end of the general price
change in the market for raw mate
rails, due to the fact that all such
numbers in use contain quotations for
a large number of commodities in fair
" advanced stages of manufacture
and in some cases ready for consump-
ton. There is a considerable lag be-
tween declines in raw materials and in
finished goods, and when quotations
from these two groups are combined
the declines in manufactured goods
are sufficient to obscure the trend of
basic material prices.
while the violent general decline
in raw materials and related products
is over, this does not preclude slow
decline for a period of years. Such a
decline would be no menace to sound
business. 1t is perfectly possible in
such a period to CORY on sound man
ufacturing and merchandising opera
tons with profit Gradually falling
prices over a period of years would
not materially affect the price move
ment of commodities over such periods
as are usually necessary for these OPP
erations. The present generation Of
American business men has been I'M
duly alarmed by the downward ten
denotes of prices. Rising prices are
not necessary to prosperity and slow
downward movement is discouraging