Henderson daily dispatch. (Henderson, N.C.) 1914-1995, 1939-01-27
Commodity Prices Reach
Low Level of Four Years

uesJ
was followed by long period of sta
ollity. The same pattern was re-en-
acted as a result of the World War.
The important point about these
commodity movements is that prices
rise rapidly during the hostilities and
decline to the pre-war levels leisure
ly. The explanation of this trend is
simple. During wartime, governments
urgently need munitions, clothing.
and foodstuffs. They need them so
badly it matters little what prices
they pay. The supply of materials and
labor is low. Hence, the huge demand,
coupled with the small supply, can
mean only a price boom. However, as
soon as the war is over, excessive de-
mand ceases and thes supply of goods
increases Naturally, prices crack.
Post War Panics Inevitable.
A period of readjustment from the
,xcesses of major war is absolutely
necessary. Huge debts are contracted
when prices of products are sky-high.
These debts cannot be met when
prices fall. Loans on land in North
Dakota, for instance, at $400 an acre
may be safe with wheat selling at
$50 a bushel, but not when it falls
o 60 cents. Hence there is always
postwar agitation for government
;upport of raw material quotations.
This has happened after each major
war since 1900. Yet, despite artificial
measures, prices have always persist
I'd in seeking their pre-war level.
To
have tried every trick in the econo-
mic bag in attempting to hold-up and
to boost prices. Despite this, they
have followed the historical pattern
and have sought their pre-war level.
A study of price movements of the
past century and a half reveals three
facts that are especially importan.
now:
1. After prices have settled back to
the pre-war level, they do not rise
again until a new major war comes
along, unless radical initiation occurs.
2. During these phases of price sta
oility, we have enjoyed long periods
of business prosperity.
3. The controlling factor is the faith,
industriousness, and behavior of the
people.
Prosperity without Higher Prices.
That we can have good business
without rising prices may be a new
thought to the money thinkers at Wash
ington, but not to the historians. In
fact, rising prices may hold back,
rather then speed up, prosperity
They often cause buying ahead on
speculation. Overstocking means less
orders and less factory activity later
IN with a resultant break in prices
This has been the case ever since
932. Each vigorous upswing in bust
(ess has been accompanied by a SEN
'ational mark-up in raw material
quotations.
Here is specific example of how
stable prices help business: Right now
payrolls are rising, dividend payments
are better, and government money is
pouring out With prices steady, this
Improvement in consumer buying
power means that more goods can be
ought This means that more orders
will be received at factories and more
money will go into pay envelopes
and around the circle again. In the
building field particularly, stabls
costs will help. The construction out
look was just as promising in early
1896 as, it is today, but too sharp a
Use in costs, killed the revival.
Living Costs To Inch Up.
Consequently, 1 am glad that raw
material prices have sagged, rather
than increased, since recovery start
ed. This strengthens my belief that
1899 should see moderate price in
,reases in many raw materials. These
,ains will be carried through to re
all price-tags. But l doubt if there
yill be any spectacular rnark-ups suc'
as occurred in past boomlets.
I cannot agree with the people VIII
are bearish because commodity price
are not rising. They are merely fol
lowing the long-term trend which his
tory shows they always follow Tho
only question is initiation. If govern
nent spending is not curbed, the ma
ton is headed for some kind of~il
flation sooner or later. However, this
is not an immediate factor. For 1889
leaders can expect slightly higher raw
material prices and a moderate in
crease in their food, fuel, clothing and
furniture bills.