Evening star., 1932-01-25
STEEL PRICE DROP
PARALLEL IS SEEN
Economic Service Recalls
Conditions in 1873 in Com
menting on Depression.
Special Dispatch to The Star.

Special Dispatch to The Star
NEW YORK, January 25.-Steel
prices going down, and inevitably going
further down, suggest to the Alexander
Hamilton Institute q situation un-
paralleled since 1873. according to the
current Weekly which says
1T is probable that the depression Of
1873 provides the closest analogy to the
current weekly which says:
1878, like the present one, was the sec
ond major slump after war and 1t
came early in long period OF falling
prices, a period which is apparently
now being repeated. If this proves to
be the case, the pre-depreSsion record
high will not be exceeded in the flrSt
year of recovery as after the depression
of 1884 and 1898. A new high record
should be made in 1895, however, II
production follows the same trend as
after the 1873 depression.
1.-The worst previous depression in the
past 65 years thus indicates that
the contraction in steel output will
not extend beyond 1892. 1t is quite
probable that steel output during the
last half of this year will be greater
than during the last half of last year.
1t is even possible that expansion during
the last half will be more than Sutf1-
cient to offset contraction during the
first half However, if there is any In
crease in output this year over 1881,
the prospect is that it will be rela-
lively small and that the attainment
of a new record high will be a gradual
process. 1t promises to be a slow re-
covery like that which followed the de-
preston of 1873 rather than sudden
come back as in 1886 and in 1885,
AN analysis of the steel situation
from the standpoint Of the prospective
demand in 1882 leads to a conclusion
similar to that arrived at by the fore
going historical study. Most consumers
of steel have not yet completed the re-
adjustment necessary to a full revival
of activity in the immediate future.
The fact, however, that part OF these
establishments have already been made,
! especially during the last half Of 1881,
and that the trend is definitely con-
timing in that direction promises that
! the end of contraction in steel output
will be reached this year"
| During this process, says the msti-
! tute steel prices must continue to fall
''The automobile industry must make
further price reductions. When the
| railroads have succeeded III reducing
wages. they must follow it up by low
ering freight rates. The building in
dustry must adjust costs to lower
level, especially labor costs. Other con-
sunners of steel such as machinery man
mfacturers and the agricultural i'm
nIement industry must cut prices. The
Steel industry must assist their Gus
toners in making these adjustments
hv lowering further the prices of steel
D. Despite I the downward price trend, steeI
Still to expensive pens tns as osrePn comparison a9moS Of
itv nrice level shows. 1t is probably
that tn a further reduction in steel prices
cannot @ be proftably made without
"i "The prospect is, therefore, that the
voor 1e32 will be characterized by a
further lowering of steel prices. pos;
sibly by another wage cut in the he steel St ee
o,,tnut and probably by a definite up.
turn in activity during the latter par'
Of the year"