The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-12-26
MANUFACTURING
COSTS EXCEED
AVERAGE LEVEL
October Figures Are Higher
Than Usual Range, Sur
vey Reveals.
Times Special

NEW 1OINh, OSC. 90 L 4lC COSG
of manufacturing in October was
slightly higher than the average for
the first 10 months, SO per cent
higher than the average for 1884
and 211 per cent higher than the
average for 1882 when the low for
the depression was reached. accord
ing to the Alexander Hamilton In
stitute. Costs in October. however,
were still 17.3 per cent below the
pre-depression average in 1929
The cost of labor in October was
slightly lower than in 1884 and only
78 per cent above the 1882 level,
the increase of 2O.2 per cent in wage
rates since the low for the depres-
sion being largely offset by an in
crease in efficiency. The increase in
the total cost of manufacturing has
thus been due chiefly to the rise
in raw material prices, amounting
to 40 per cent since 1882.
Relative to 1929, however, the cost
of labor IN October was higher than
the cost of raw material, since labor
costs started their advance at a
much higher level than raw mate
rial costs.
Levels Relatively Higher
This was due to the fact that
from 1929 to 1882 labor costs were
debated only 20 per cent, whereas
raw material costs we're Debated
1875 per cent. On the basis of 1929
as 100, the index of raw material
costs in October was 791 whereas
the index of labor costs was 86.2.
While the total cost of manufac-
turing in October was 21.1 per cent
above the depression's low, the price
level of manufactured goods showed
an increase of only 1T per cent.
On the basis of 1929, however, prices
we're relatively higher than costs
since prices during the def1ationary
period did not decline to the same
extent as costs. The price index in
October was 876 as compared with
the cost index of 82.7 taking 1929
as 100.
Since the national income avail
able for the purchase of manufac-
tured goods in October showed a
greater advance than prices from
the depression's low, the price rise
did not prevent a recovery in man
ufacturing activity.
Prospects Only Fair
The national income, however,
was not sufficiently high to permit
recovery to the 1929 rate at the
price level prevailing in October.
The situation called for price in
dex of 500. Consequently, since the
price index was 876, factory output
in October was about 20 per cent
below the 1929 average.
The prospect is that the national
income available for the purchase
of manufactured goods in 1886 will,
at the most, show only moderate
gain over 1885. In fact, there is a
fair probability that it will show a
reduction. Consequently, progress
toward recovery next year will de-
pend largely, II not entirely, on
lower price level. At least some
price decline seems now to be in
prospect. The larger harvest will
make for lower raw material costs.
The larger harvest will also make
for lower cost of living which will
make possible lower wage rates.
With the NRA abolished, the ten
dency should be toward the eStab-
lishment of longer working hours
and this will also provide the basis
for lower wage rates In addition,
the cost of labor should be reduced
by continued progress toward more
efficiency. Finally, it is possible
that the spread which now exists
between prices and costs will be re-
duced.