Evening star., 1925-03-28
BY ROGER w. BABsON.
lneciAl Dispat tch TO The Star.


Special Dispatch to The Star.
BABSON PARK, Fla, March Is
Prices have again turned upward
Various commodity indices and-E the
cost of living figures show that the
average Is rising. Thes question
arises as to the effect of this tendency'
on general business. -.
The first effect OF rising prices is
a. stimulant- TO business. When things
start to go up, the peoples who nave
been waiting, buy, Manufacturers
also stock up with materials AS the
movement continues, however, the
same tendency becomes brake on
business. When prices get above
the level that most people consider
fair value, they stop buyfn 8 ? alto
gether AS a matter of fact the aver
age buyer goes at the thing In hap
hazard fashion.
Special study Needed.
Statistics have their uses, but also
their abuses. The cost of living IN
dices are useful to the statistician,
but are often dangerous in the hands
of the layman Fishers Index is
probably the best price index in ex-
istence today. being weighed scien-
tifically. Even this, however, must
be used with discretion. When the
price index shows an increase, 1t
should be remembered that this ap-
plies only to the average of all COM
modities., When we purchase COM
modities we do not buy the average
list but we buy specific articles
Therefore, although it is well to
watch Fishers Index, yet the i'm
portant thing when purchasing is TO
study the position of the speclf1c
ndifN nr- arfitla which is
purchasing.
All Prices Not Higher.
Numerous illustrations might be
given showing that although the gem
eral price index has risen, all prices
have not risen. For instance, one
can obtain more actual value for
dollar today when purchasing an au-
tonobile than at any previous time
in history. Not only are the auto
mobiles lower priced. but the quality,
durability and efficiency are being
materially increased. This does not
mean that automobiles may not be
further reduced in price. They prob
ably will be as time goes on, but even
at the same price one will be getting
more in actual value In 1925 than in
any previous year. This same fact
applies to tires. oil. gasoline, bat
teries and practically all accessories
COdueOlGu " Ill lIIIS ~" lll5 AIld IL y
Electric Current Cheaper.
Another illustration of lowering
prices is the electric current which
We use for lighting, power and other
purposes. While the securities of
light and power companies have been
gazing up, the price of the commodity
itself has been going down. In. this
respect, the electric power business
is just the opposite of the telephone
business. The cost of the latter in
creases per unit as the telephone sub
scribers increase in number; but the
cost of electric power decreases per
unit as the amount used increases.
Electricity for light and power is
being bought for less today than in
any time in it's history. and even low
er prices will be introduced in many
communities during 1925.
Sugar Lowest In o Years.
Among the household commodities
there is sugar, which every one uses
and which is selling for less today
with the exception of late 1921 and
early 1922, than it has for years.
Other illustrations might be given
such as these to show the point in
mind.
The above products are cheaper
owing to definite fundamental tend
commodities that are lower today be-
cause of seasonable and other tenn
porary reasons. When taking a list
of 106 commodities which are the
basis of one of the price indices, we
find ~ commodities selling for less
than they did a year ago. Among
these may be mentioned:
Fruits, chemicals and drugs, tex
tiles, cotton and silk. coal and coke,
naval stores, turpentife and build
ing materials.
More Education Needed.
Without doubt the American people
need to be educated in, connection
with buying The advertisement
which attracts them into the store
has been developed until 1t can be
depended upon for almost certain re-
suits. The sales person is carefully
and thoroughly trained. The selling
of goods has become a. fine science;
but very little has been done to help
the public to buy intelligently. AS
result of this people buy everything
when they are flush, and then stop
almost entirely and buy as little as
possible.
This is one cause of our successive
periods Of prosperity and depression.
The is always some commodity or
article that is too high and careful
buyers restrict their purchases of
such a product until it comes down
in price. On the other hand, there is
always some article that is selling
around normal or even below the cost
of production. Certain lines of shoes
are an illustration of such an article
today. When such a condition exists,
careful buyers will purchase all they
need for some time to come, even