Evening star., 1940-12-29


tense Commission, he is in posi-
ton to bring special knowledge
to bear upon the subject.
BY ISADOR LUBIN,
United States Commissioner of Labor
Statistics.
Major wars of any considerable
duration have always been associ-
ated with profound disturbances In
commodity markets. The teritlc
strain on raw material resources
producing capacity and man power
and the interruption of the normal
flow of world commerce has led al
most inevitably to spectacular in
creases in the general level of COM
modify prices, only to be followed
after the close of hostilities, by
long and painful deflation. The eX-
tent of these disturbances is clearly
shown in chart, which shows the
trend of wholesale prices in the
United States since the year 1900
Each of the three major American
wars brought price boom-the
War of 1872, the Civil War and the
World War-and each was followed
by very extended period of re.
adjustment, lasting more than q
decade.
Europe has now been at war for
more than 16 months and the
United States is not only selling
supplies to belligerents but is ex-
pending huge sums in building up
its defenses rapidly. 1t is newt
able that this should have roper
cussions in American commodity
markets and upon the cost of liv-
ing. So far, however, the gen.
eral level of commodity prices has
not shown any very sharp ad-
vance over the summer of 1889
when most prices had not yet fully
recovered from their declines in the
industrial recession which began in
the autumn of 1887. At the end OF
1910, the all-commodities index OF
the Bureau of Labor Statistics,
based upon the wholesale prices OF
nearly 900 products, was about 6 per
cent higher than it was in August
1899. Just before war was declared.
Retail prices had risen even less
and. by November IS, 1910, the cost
of living in American cities-includ-
ing rents and services, as well as
food, clothing and housefurnish-
ings-was Is per cent above Its Au-
I,fr vic
has been very moderate in view of
the fact that almost $4,000. 900 900
Of defense orders were let by the
United States Government between
June !. 1910. and December IT, and
that these were superimposed upon
several more billions of British pur-
chasing.
1915 Lag Recalled.
In comparing present conditions
with those after the outbreak of the
first World War, it is we'll to point
out that then, too, the first 16
months of conflict in Europe did
not bring any marked advance in
the general level of American COM
modify prices.
Wholesale prices did not really
start to rise until the autumn of
1915 and by December of 1915 they
we're only per cent higher than
they had been in 1919. On the other
hand. the volume of European Or
tlers received by the end of 1915 was
far less than today, and domestic
rearmamtnt was then only minor
factor. III relative terms, therefore,
the American economy has with
stood the impact of events far bet
ter today than it did Is years ago.
In the late summer of 1899 the
general level of commodity prices
in both wholesale and retail mar
kets was about 25 per cent lower
than it had been in the late 20s.
The drop in the prices of farm
products and foods had been par
ticularly severe in the depression
years and recovery had been only
partial. Retail food prices. in fact,
were - per cent lower than they
had been in 1887.
The entire picture changed
abruptly the day after Poland was
invaded. The Bureau of Labor Sta
tistics' daily index of spot prices of
% basic commodities, such as wheat,
cotton, rubber and scrap steel, which
is representative of the most i'm
portant raw materials and semi
manufactured goods used in Amer
ican industry, jumped 20 per cent
within single week.
Export Items Affected.
AS might be expected, the sharp
est advances occurred in those ma
terials which are normally obtained
from overseas, such as wool, bur-
lap, tin, rubber, quicksilver and cod
liver oil. In addition, many COM
modities which come wholly from
domestic sources, such as grains,
livestock, cotton and scrap steel
rose also because businessmen, re-
membering the closing years of the
World War, anticipated a huge in
crease in demand for sales to bel
ligerent nations.
The advance in prices during the
late months of 1889 affected not
only those articles for which in
creased demand or a supply short
age was highly probable, but ex-
tended also to other goods for
which such developments were very
unlikely. An outstanding example
is the case of sugar; in wholesale
markets it rose 25 per cent in tn
first days of September. Rumors OF
a shortage of the Japanese silk cror
caused the price of silk to jump
from $184 per pound at the begin
ming of 1899 to $40 in December
Prices of many other imports, such
as tin and cocoa, rose much more
sharply than underlying conditions
warranted
At the beginning of 1910, the re.
action from these speculative ex.
cesses coupled with the relatively
inactive state of hostilities caused