Evening star., 1935-04-28
CONTINUE
TO MOVE TOWARD
BETTER BALANCE
Ratio Between Raw Mate
riaIs and Finished Goods
Being Restored.
REIMBURSEMENT HAILED
AS BUSINESS FACTOR
Sharp Expansion in Farm Buying
Power Likely to Stimulate
Industrial Areas.
BY FREDERICK GARDNER,

Associated Press Financial Writer.
The pendulum Of prices continues
to swing back toward a restoration
of what economist call balance be-
tween raw materials and finished
goods.
In recent readjustments among the
various groups in the domestic price
structure, the movement has been
distinctly in favor Of farm products.
Farm products on the average,
measured by the Bureau Of Labor
statistics indices, now stand in the
most favorable relationship to other
groups since 1880.
In the latter half of 1880, the in
dex Of farm prices dropped below that
of non-Agricultural groups after hav-
ing been above it during most of the
preceding prosperity period. The
disparity between farm and non-farm
prices widened until trends turned in
March, 1888.
Closing Of Gaps Watched.
Since much of the New Deal pro-
gram has been directed toward elm
mating this disparity and restoring
balance between farm and non-farm
prices, the closing of the gaps is
watched with close interest by politi-
cal observers for the influence 1t
might have on future administration
policies.
Revaluation of the dollar In gold
was undertaken for the avowed pur-
pose of correcting price disparities
and promoting recovery in the ex-
change of goods between producers of
finished and raw materials.
A material reduction in the sup
ply of some farm products resulting
from drought and A. A. A. control
has introduced confusing factor
into the price picture. Aside from
silver, the big gains in prices in
recent months have been in farm
products, of which the supply has
been cut greatly.
Nevertheless, many price students
are disposed to read optimistic busi-
ness interpretations into the read
justments which have been bringing
balance with finished goods.
What this will mean in the way of
business expansion, they say will be
evident in the second half of this
year if farm prices hold up around
current levels in face of the antici-
pated increase in crops.
Increased Buying Foreseen.
Given more volume. they contend.
the farmer will be set to buy an
increased output of industrial goods
from city factories. Indeed, the
farmer is credited with much of the
enhanced purchasing power now go
ing into automobiles. home equip
ment, radios and other lines which
have been turning in relatively good
production reports.
The Bureau of Labor Statistics in
dex for farm prices is at the highest
since October, 1880. It Is 81 per cent
higher than year ago and SO per
cent above the comparable April, 1888,
figure.
leading non-farm groups still show a
tendency to sag or remain in a mar
row zone. Notable are building mate
rails, house furnishing goods and mis-
cellaneous commodities.
In other words, while the prices of
eggs, grains, live stock and other farm
products have risen markedly in the
last year, those of automobiles, tires
and many other finished products
have been stationary or have declined
q little
The all-commodity index for last
week stood at 80.3 per cent of the
1926 average, compared with 1873 a
year ago and 60.4 two years ago.
Comparisons Are Made.
The readjustments which have oc-
CURED may be seen in the following
comparison Of price indices for lead
ing commodity groups on the basis
of pre-depression averages, the
approximate lows two years ago and
the latest figures, all of them for
April:
1ooo moo roo.