The Washington times., 1935-04-10

| ~ prices, and 90
~''@'.> certain factors
Lewis Haney which are tend.
ing to depress business and the de-
mand for commodities, thus keep
ing prices down.
We may list the price-raiSing
factors as follows:
l. The devaluation of the gold
dollar has not been fully effective.
and as long as there is any thought
of our being on the gold standard.
this is constantly working toward
a depreciation of the currency.
2. The silver buying program is
proceeding, and silver has been
run up to over so cents an ounce.
This is connected with an injec.
ton of over-valued silver into our
currency, and is tending to depre.
ciate the purchasing power of the
dollar.
8. The potential credit piled up
in the banks is enormous.
4. The Governments new spend.
ing program involving $4,880,000'
900 is likely to get under way be-
fore long.
S. On top of this is the prob.
ability that some compromise on
a. cash payment on the soldiers
bonus will be reached before June.
6. The drought is a serious fac.
tor affecting the supply of certain
farm products, and thus raising
the costs of some finished goods.
CThis factor, however, is offset by
reduced farmers purchasing pow
err and demanO.
7. The possibility of labor dis.
turbances leads to some anticipa.
ton of strikes, and temporarily
tends to bring in some buying in
certain industries.
The factors tending to depreSs
commodity prices may be summed
up as follows:
l. Business activity is retarded.
2. The depreciation of the
pound sterling and the belga are
the equivalent of cutting prices
on the exports of England and
Belgium, thus tending to depresS
world commodities.
3. Stocks of some commodities
remain excessive, and in general
productive capacity easily keeps
up with demand.
4. Nationalistic policies tend to
restrict purchasing power and
limit markets.
S. Uncertainty as to our Gov.
eminent policy. both as to control
of industry and as to money.
retards business planning and
leads people to seek "liquidity"
rather than income.
6. The growing tendency Of
politicians to make threats against
the wealth of "the few" has the
same effect.
7. The continued weakening Of
the MIRA as price-fiXing agency
is accompanied by a tendency ia
make it a sort of collective bar
gaining arrangement to support
high labor costs, which is not
conducive to business activity.
8. The rising cost of living
drives consumers to limit expendh
lures to neceSsaries, and thus
producers consumer resistance"
8. Finally. more people are con-
sidering the possibility that
maybe there will have to be a
period of deflation before the in
flationary forces can assert them.
selves.
In general, it seems fair to say
that as long as we continue in
this half-inflated, half-defated
condition, and the Administration
keeps on trying to initiate with
one hand, while doing deflation.
airy things with the other, no gen.
eral change in the level of prices
is probable This condition pro"
duces irregular movements. On
the whole the tendency is to drift
lower, but with occasional SpurtS
which are soon checked by fresh
evidences of hostility to business.
The most likely price Stimulant
now in sight is Government spend
ing. Probably the four billion dol
lars program will be slow in get
ting under way, as has been the
case in the past, but sometime be-
tween June and fall the FUNDS
should begin to pour out, ana
Government orders for materials
become a factor in the markets.
One thing to watch is the pro"
preSS of Government bond CONVEX
sions. If they go slowly, there
would be a tendency to weakened
confidence in Government credit.
and that would start fears Of the
depreciation of the dollar. Such
fears are the Surest way to pro-
duce further effective initiation.
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