Evening star., 1940-12-29

| i
founded, and the Japanese govern
ment considered it necessary to step
in and peg the price to keep it from
falling further. The general level
of wholesale prices fell less abruptly,
but it, too, lost half of its early gains
by the middle of August.
Pessimism in this country regard
ing the course of the war abroad
probably explains the persistence of
the decline throughout June and
July During this period, however,
shortages of some raw materials
such as pulp quicksilver and man.
ganese became accentuated by the
successive extensions of the war
zone TO the Scandinavian Peninsula
and to the Mediterranean, and the
prices of these materials advanced
sharply.
More Importantly the effect of
increased United States Govern
ment purchasing under the acceler-
ated defense program began to be
felt in many markets. For a time
| the prospect of an early peace
overshadowed these developments,
! but by the middle of August the
| trend of prices was reversed and the
| long define in wholesale markets
gave way to a broad and sustained
advance which has continued al
most to the end of 1910.
Capacity Is Taxed.
/ This rise has differed from that
| in the corresponding months of
1889 in a number of important
respects. In the fall of 1899 the
preliminary problem was to insure
an adequate supply of raw materials,
whereas, in the past few months,
capacity for converting these ma
/ teria1s into finished goods was be-
/ ginning to be taxed AS a result, a
! far greater number of finished pro-
/ ducts have advanced in price since
| last August than was true in the up
swing in 1899.
| Although limitations of capacity
in relation TO current demand have
not as yet affected prices in many
/ industries, there are some important
! lines in which strong sellers mar
ket exists because of limited sup
plies. An outstanding example is
machine tolls in which both foreign
and, recently, domestic orders have
! far exceeded capacity. List prices
for certain standard types have
been advanced by 10 to 20 per cent
since the beginning of the war, and
deliveries are far behind orders in
spite of substantial increases in
producing facilities.
There are other industries in
which, although capacity appears
adequate to meet sustained demands,
some temporary difficulty has been
experienced in meeting the sudden
very large orders coming out of the
defense program.
One of the first striking illus
trations occurred IL the case of lum-
ber. Large Army orders for the
construction of cantonments came
into this market in the late summer
of 1910.
Demand was particularly heavy for
for Southern pine and Douglas fir,
centering in certain areas near can
tonments. Willie there was prob
ably no shortage of capacity as such,
the impact of these heavy orders
resulted in sharp upswing IN prices
which has persisted ever since. Be
tween the beginning of September
and the end of November, 1910, the
price of yellow pine timbers rose u
per cent and that Of yellow pine
boards about Is per cent.
Textile Trade Rushed.
Some of the lighter industries
making consumer goods have also
been strained to meet the needs of
the quartermaster's department.
From the point of view of prices,
the most important of these are
the cotton and wool textile indus
tries.
In the wool industry, threatened
shortage of raw materials was for
some months aggravated by made
ouate wool combing capacity for
converting raw wool into wool tops,
and prices of wool tops rose faster
than did the raw material.
Prices of wool fabrics have moved
more or less parallel with those of
wool tops. 1t is noteworthy that
when Army requirements for the
balance of the fiscal year 1940-41
were definitely stipulated at the
end of November, the market
uuieted, indicating that much of
the price disturbance had been due
to uncertainty on the part of the
trade as to what was expected of
| them.
J In the cotton textile industry con-
| ditions were somewhat different.
Prices of raw cotton are, at pres
ent, at just about the same level as
they were in August, 1910. How
ever, loom capacity for producing
certain kinds of fabrics has been
strained somewhat to meet Army
demands. For some products, such
as sheets and certain qualities of
broadcloth used in making under
wear, total capacity seems to have
been adequate, but the orders placed
required some curtailment of pro-
duction for the civilian public. For
other products, such as the heavy
industrial fabrics and jean cloth
for Army shirts, difficulties have
been encountered in obtaining bids
adequate to cover the quantities
asked by the Government. In the
case of jean cloth, the announce
ment of Army requirements was
followed by withdrawal of market
quotations by most producers. In
general. prices of all kinds of cotton
cloths, have risen, though not very
sharply. By mid-December, price
increases for broadcloths in the
gray ranged from 10 per cent to %
per cent for different constructions,
while those for print cloth had ad-
vanced about 13 per cent.
Wholesale Prices Up.
These increases in the cost OF
semi manufactured goods have quite
naturally been reflected to some
extent at the next stage of fabrica-
! f;oy, Coftor, Garments S1lch q c 0ver-