Payette enterprise., 1921-05-12
FALLING PRICES
A Few Facts You should Know.


Failing Prices" by a Country Banl
er which is well worth reading. Thi
banker does not give his name bu
he says he lives within five hou
ride of Chicago.
For more than forty years he ha
been in the First National Bank o
his home town and he has studied
the problems that we face now witt
more than usual interest. What h,
says, we may well spend some timt
thinking about.
''As far back as 1 can remember
he writes, Complaint about price:
has been common" Prices have new
er been right within my recollection
and there have always been schemes
afloat for correcting the wrong in
them.
Prices that our farmers now con-
slider monstrously low are, say a
dollar sixty for wheat, sixty-five for
corn, nine dollars a hundred for hogs
But back in 80 wheat sold for fifty
cents, corn for ten cents and hogs
hardly paid the freight to market
And ten years ago when wheat got
up to dollar a bushel, the whole
country was agitated about rising
prices and the high cost of living.
In short, it is chronic. Prices
are never right. Always people are
figuring out schemes to make them
right. Well, l have figured out
scheme of my own. The object of
writing this is to submit it to the
public. I believe it is bullet proof
and water tight.
when times are good, prices
rise; when times are bad, prices fall.
That is the first proposition. Good
times and rising prices go together.
Bad times and falling prices go to-
sether. There is plenty of theoriz.
ing as to whether good times cause
rising prices or rising prices cause
good times. But let's not stop to |
argue whether the egg or the chicken
came first. Let's simply say that
flush times and upward prices go
together.
IF you consult the books in order
to find out what makes times good
at one period and bad times at an
other period, the answers boif9 down
substantially to this: People with
money to pay out-all sorts of con.
ditions of people with money, wheth.
er lot of money or little-feel hope.
ful, cnfident of the future. So they
pay out their money, buying goods to
consume, also extending their plants,
putting up buildings and so on That
gives employment to labor; wages :
look upward.
With more money to spend, labor .
spends more freely, food prices rise. /,
which gives farmers still more
money to spend, so they buy more of
Of the products of wage labor, which s
is consequently still more fully EN-
ployed at still higher wages-and
- 9C AOul4A the ClICit.
But all this buying and building .
and higher wages and higher prices |
requires more credit. 1t takes twice a
as much bank money to handle two, +
iollar wheat as to handle dollar f
wheat. If wages double, the manu- e
acturer needs more credit to carry v
lin until he sells the goods. If the /,
FOODS cost more then the merchant t.
reeds more credit. So the banks get Y
oaned up or over-loaned. They get v
lervous about that and begin to re- t.
trict credit. Then other people get n
Ieryous about that and let up on G,
uylng and building. Labor is nor
o fully employed and has less buy. d
ng power. Food prices fall and m
ne farmers have less money to "
pend. Then all go round the circle m
the opposite direction" 81
This banker then explains that n Il,
as not the cutting down of credit bt
lat starts the slump in prices. But lii
hen the banks refuse to expand anv la
irther, the tide turns and prices t.
egln to- fall There is more money dl
aned by banks today than there pc
as when prices were climbing so ia
st in 80. But banks are not let st
ng this credit grow larger now so
ats the difference. There must he m,
stopping place some time. To LET
edit grow on and on would bring as
o entire country to grief before kn
ng. al
AS this banker points out, prices he
ID been growing larger for some iik
ne before the World War started w
1914. Then the nations at war
me to this country with billions co,
dollars and they spent money the
mt and left for things they needed poi
carry on the. war. They did not pri
ggie about prices; they had to COZ
We the goods at any price. Prices mo
wv rapidly of course.