Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-18
BUSINESS
PREDICTION MADE
aA
Wilson & Co. Believes De.
cline in Prices Will
Soon Be Halted.
Special Dispatch to The star.

Special Dispatch to The Star
NEW YORK, August 1S.-"An amaz-
ingly close correspondence between cur
rency and price deflation throughout
the world" plus the fact that American
currency deflation has now been
checked, leads James C. Wilson g. Co.
to say in their current monthly sum-
mary that the facts all point TO q
prompt "arresting of commodity declines
and gradual healthy return to stable
prices, better earnings ratios, increased
business confidence and firmer and
higher levels for stocks"
The summary backs up its contention
that currency deflation Is responsible
for commodity price declines with facts
going back over the last IL years, say
ing: 1T Is rather spectacular coinci-
dence--to say the least-that the drop
In all commodity prices Gas registered
by the United States Bureau of Labor
Statistics) from 1920 to 1922 was 3s.3
per cent, and that the drop in United
States currency imitation in the same
period was 1858 per cent.
Extent of Drop.
at is an equally important coinci-
dence that the commodity price drop
from the 1928 average to June. 1880, has
been Ill per cent, and that the CORE
spending drop in United States currency
imitation has been 125 per cent.
Still more interesting-aS bearing out
the close relationship between currency
imitation and commodity priests the
record of the general period from 1929
10 1873, inclusive. The drop in COM
modify prices from the 1928 average to
the 1928 average was 2.88 per cent. In
currency imitation the corresponding
drop was 1854 per cent. Moreover, dur
ing every year of this period the average
up or down trend Of commodity prices
coTreSponoeo TO an up OF down trend
In the extent of currency imitation"
Ihe summary defines currency de-
nation as a reduction in the amount
OF all currency in circulation compared
10 the total stocks of gold available for
redemption purposes" and saws that
compared to normal spread of from 10
10 70 per cent between American gold
and currency, this spread was suddenly
| reduced to zero on April 30--and the re-
suit has been apparent in the most
| drastic price decline in commodities
since 1921"
The practical value of this. according
to the survey, lies in the fact that cur
rency def1ation Cor inf1ation) generally
precedes by about three months a change
| in the general price levels'-and adds
that since def1ation was checked recent
| ly and a return toward a normal degree
of imitation has again set in we can now
look for continued solid improvement
in all marketS-an accelerating business
pace as buyers move to take advantage
Of extreme low prices-and above all
/ for healthier state of mind now that
the panic fear induced by the results Of
| sensational currency defiation has no
further foundation"
DefiatiOn Worldwide.
The summary gives supporting figures
/ for the important fact that currency de-
| fiation has been as worldwide as COM
modify price declines, saying ''our rec
ords show that the weighted average
currency deflation of the U. S. A. and
the six leading foreign central banks
| has been approximately IL per cent
| from June, 1929, to June. 1880. In the
same period the commodity price de-
cline registered by the average of four
leading indexes, including the London
| Economist, has been exactly 12.1 per
cent. The summary draws the conclu-
sion that this drastic currency defla-
! tion-now past hiStory-'is certainly a
more reasonable explanation" of COM
modify price declines than the vague
| hue and cry of 'overproduetion'," stating
| that "in a world living by barter and
| exchange genuine reproduction Is
| possible only in a fey lines at time"
whereas commodity price declines have
| been almost universal"