The Washington times., 1931-02-04
WEAK PRODUCE
PRICES HURT
TRADERS
Farmers Are Greatly Affected
BY Weakness Prevalent in
the Commodity Markets
By LEWIS HANEY
Director Of New York University Bureau
of Business Research and Former
Economist of Federal Trade
COmmissiOn

commission
On the whole, it can be said
fairly that January returns will
show slow and moderate progress
toward more stable business. The
statistics are going to be mixed.
But that is better than a uniform
decline.
January figures will doubtless
show a little improvement in the
steel industry. This will be due
chiefly to an expansion in automo-
bile production in anticipation Of
the spring demand. 1t remains to
be seen whether the cars will sell,
but most manufacturers appear to
have been cautious, so we may
hope that their anticipations will
be realized.
Compared with a year ago, how
ever, the month will show con-
siderably lower level. Bank clear
ings have been running about 81
per cent below last January.
Railway car loadings, though
making about the usual seasonal
gains, will be much lower. One of
the big mail order houses reports
sales in January about 10 per
cent below last year. Of course,
business failures have continued
numerous and much above Janu-
ary, 1880.
Farmers Not Doing Well
We will find the January aver
ages of commodity prices show
ing a further decline. Thus the
recent Government report on farm
prices indicates drop of more
than 3 per cent between Decem-
Der IS and January Is, with the
index now the lowest since 1912.
Nothing is to be gained by
ignoring the fact that the bulk
of our farm population is in
pretty bade shape financially.
The purchasing power is greatly
depressed and, farm discomfort
usually means greater radicalism
in Congress.
AS to the week just passed, the
chief favorable developments have
been continued improvement in
business sentiment, progress in ad-
iusting European financial cond1-
tions, and further reductions IN re-
tail prices with some response
among consumers. Trade reports
indicate good inquiry for machine
tools. suggesting that the Decem-
Der rise in this important barom-
eter may be sustained.
Hold English Gold Up
The success of measures taken
by the Bank of England to stop
the outflow of gold is promising. A
little rise in the discount rate
strengthened exchange rates with
France and the United States, and
for the present England is able to
maintain her gold supply.
Probably the most unfavoranle
indication in the past week was
the renewed weakness in a num-
ber of commodity markets. The
sensitive steel scrap market de-
clined, and pig iron was weaker.
Because of a very dull demand
(While world production has been
curtailed relatively little) copper
prices fell back to 934c.
1t must be added, too, that
the grain and live stock markets
declined. Corn prices touched a
new low for the season.
Business Uncertain
Experienced observers are sure
to conclude that general business
recovery will remain uncertain
until the markets for the basic
raw materials of industry become
stabilized. If the current price
declines are due to large supplies
alone, they are unsettling and
tend to check buying. If they
are due to low demand, they
show that buyers are still held
back by slowness in trade. For
example, it is hard to get very
enthusiastic about the steel in
dustry as long as demand for
scrap and pig iron is weak as
shown by their prices.
I advise a cautious attitude
toward business until we get
stronger evidence that commodity
markets are really firming up.