The evening herald. (Klamath Falls, Or.) 1906-1942, 1922-03-15
I,y Robert d. Smith. President, 1nim
hrr,ncn's Trust Compnnk Bank.
Portland. ore.

IOrVu0nU, WE.
The most significant business de-
vel0pment In the past two months In
tho tendency for prices OF differeb,
commodities TO readjust themselves
TO pre-war or normal relations 10
each other. Raw products, particular.
iy farm products. are Increasing In
price while manufactured products
seem 10 be following.
Every month the New York FEEDER.
nj Reserve bank complies o price In.
de1 OF all commodities showing the
relation Of present prices to pressr
prices. This index has revealed some
temendou differences. some com.
moditics being below prewar levels
while others are 200 per cent above
In a general way. farm products have
averaged about 10 per cent over
prewar levels while manufactured
products have averaged about 1865
per cent. The average Of all prices
has been about 13S per cent. The
great discrepancy between the price
OF farm products and manufactured
products has been one OF the major
causes for driving the farmer out OF
the market. In the past two months
prices OF farm products have increas.
ed while prices OF manufactured pro.
ducts have fallen. but the average
price OF all commodities. raw and
manufactured. has remained about
the same. II this feadjus,m.nt con.
,inucs. Il will have n marked effect
In stimulating business.
The prediction made by the Pro
fessor OF Economics Of Michigan Uni.
yersity that the total value OF all
manufactured products OF the nation
mus, be about the same a. the total
value of all farm products seems to
be working out. and ! think we will
find that there will not be any large
demand for manufactured products
until the prices are In closer harmony
with the price levels Of agricultural
products. I conclude, therefore. that
II the prices OF Manufactured pro.
ducts continue to fall and the prices
of farm products continue TO increase.
the business OF the nation will i'm.
prove, and. II the relations OF farm
and manufactured products are on
practically prewar basis by the time
that the fall crops are harvested and
the farmer IL In funds we should have
quite a revival OF business.
TIL. principal reason for the high
price levels OF manufactured products
is labor costs and these costs mus,
continue to decline before business
can go ahead q, . normal rate. Dur.
Ing 1919 common labor was receiving
a compensation Of a bushel OF wheat
a day. whereas Il is now receiving
three bushels OF wheat. This si,ua.
ton ir fundamentally unsound and
k one Of the greatest reasons for the
present commercial s,agnauon.
There are, OF course. many other
factors entering into the situation,
such as high federal and local taxa
,ion. and the condition OF foreign
exchange and international trade.
These and other influences have I'm.
portant bearing on future business
but the relation OF the
prices OF raw and manufactured pro-
ducts Is undoubtedly the major fac.
tor In the situation.
Federal Rcssrse Hank aud Farmers
Many unwarranted statements
have been made In support OF the de.
mand that a dirt" farmer be placed
On the Federal Reserve board. Some
of these statements doubtless are due
10 lack Of information and others are
lot In accord with facts which are
easily obtained. For example, the
,harge is made and widely circulated
hat the Federal Reserve banks have
against the agricultural
districts in granting credit. That the
'ederai reserve banks have co-opera.
ed in extending assistance to farmers
with unstinted liberality is proved by
he fact that. contrary to the state
nent that credit to the farmers was
In the fall Of 1890. the
Reserve banks In Industrial centers
we're ioaning goo million dollars TO
'eserve banks in agricultural dis
ricts in November Of that year when
oans were AZ the maximum. From