The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1922-06-27
PRICE MOVEMENTS.

previous week and sara for the week
ending June %. 1921.
The effort to curtail the volume Of
deprecated paper currencies and to
restore them to a gold basis is expect
ed to contrfbut to a material reduc-
ton of average world prices from
present levels. states the current
number of THE Guaranty Survey
just issued by the Guaranty Trust
company of New York. IN discussing
the probable trend OF commodity
prices
The upward tendency of average
prices. which recently has become
more pronounced, is causing anxiety
in some quarters and qualification in
others. 1t has stimulated interest in
the question of the probable future
trend of prices. which has not ceased
to be a matter of serious concern since
the halt in the downward swing in this
country about a year ago. At that
time, as measured by the index of the
bureau of labor statistics, wholesale
prices were nearly so per cent above
the 1913 average.
The net change since has been up
NdEus C(OIlbaAAAEa Al ASNGAAI AAAOAANAAS
by an upturn in such countries as
Great Britain and France. This has
teen accepted by some as evidence
that a new normal average of prices
at approximately the present level Is
being established Others think that
major upward SWIM has begun. On
the other hand. some students OF price
movements regard the current rise as
merely a slight temporary reaction
against a long-term recession which Il
is expected will carry prices below
present levels and probably even be-
low those prevailing Immediately be-
fore the war.
THE idea that prices of a particular
period may properly be regarded as
normal is remarkably persistent" says
the Survey. 'Tt has been fostered by
the fact that generally index numbers
of prices as originally constructed or
as re-computed are presented in terms
Of a comparison with 1913 or 1914
prices. The fact is of course that
prices fluctuate thru minor and major
cycles and seldom is a given level
long sustained. Accordingly no con-
sensus of judgment as to what should
be considered normal prices is posi-
bic. If the vast economic waste re-
sulting from extreme variations in
average prices were fully appreciated.
the test of normality for general
prices would be stability-whether at
one or another level being a matter
of little consequence"
In most of the principal countries !
of the world unusually large amounts |
Of paper currency. more or less depre- |
Ciated in terms of gold, are in circula-
ton The effort to curtan the volume I
of such currencies and to restore them |
to a gold basis is expected to contrib
ute to a material reduction of average |
world prices from present levels.
The expected expansion of produc- |
ton and the increase in the physical /
volume of business in the world as a /
whole, as recovery from the derange-
ments OF the war period progresses.
would also tend to reduce prices. In
many lines of industry there was de-
veloped during the war a producing
capacity considerably in excess of or
binary requirements. Largely because
of this condition. a somewhat prolonged
period of unusually intense COMPETE
ton is expected. such as is already re-
Elected in the statistics of business
failures and in actual or contemplated |
mergers.
In view of the relationship between
prices Of farm products and Of manu-
features. it seems reasonable to expect
that the future course of prices will /
be governed largely by the influences
determining whether, in the readjust-
ment Of prices that may be expected. |
farm products will increase or manu-
features decline. 1t has been noted |
that there is a remarkable parallel
between the value of all farm prod
ucts in this country and the value OF
manufactures added by the manufac-
turing process.
The fact that after each of the ma
ior wars of the last century prices re-
acted to lower Levels than obtained |
before is frequently cited as indicat-
ing the probability that in the present
instance prices will fan below the
levels of 1918 before a major upward
swing takes place.
On the other hand. the general re-
sistance TO deflation and the hard
ships resulting from a general decline
OF prices, the availability of increased
and more effective credit machinery
ana enormous gold reserves in this
country. and the probable gold pro-
duction Of the world. are expected by
some students OF the problem to sus-
tain prices at approximately present
levels for comparatively long period.
and perhaps to raise them.
On the whole business will be aided
by stable or advancing prices, while
any considerable decline is certain 10
have an adverse effect.