Smyrna times., 1941-06-26

nassed in an attempt TO peg prices.
n addition to this, other means
Will be used in an attempt to keep
demand from running away with
the supply, thus skyrocketing
prices. The treasury is selling de-
tense bonds in an effort to drain
off money through loans to the
government made BY the pur-
Chasers.
Higher taxation has a two-fold
purpose. II not only pays the
bills but also is effective in hold
ing the standard of living down to
point where excess consumer
demand Will not push up prices.
Further measures of regulation
such as the Federal Reserve dis
count rate and bank reserve re-
uuirements will be utilized in an
effort to block credit infiations.
All these measures are sane and
necessary, but they will prove in
adequate in the face of natural
economic forces which are head
ing us toward infiation.N
Advances in prices on the part
Of producers will reflect quickly
in consumer prices. 1t must be
remembered that years ago deal
ers and distributors, or jobbers,
as they are often called, carried
heavy stocks of consumers goods"
the items we need as part of
our every day life and farm op-
erations. In recent years very lit
lie stock has been carried, with
the result that the natural cushion
between the manufacturer and the
consumer no longer exists. For
merly stocks were sold at some
point between acquired price and
replacement price. The result was
a gradually rising price. This
time, however, prices will take
sharp jumps. .
Let US analyze some of the
causes Of these price advances.
One of the first will be wages of
labor. In spite of theories 10 the
contrary, any wage increase is
ultimately absorbed by the con-
sumer. Labor has won increases
in the coal and steel industries.
The result, no doubt, will be an
advance in the price of steel. Steel
is a basic industry. For every
dollar advance in raw steel there
will be approximately a four dol
lar advance in the price of fin
ished goods.
In addition to the higher wages
Of labor, white collar workers
gust receive advances in pay. De-
SS9se industries are trying to hire
foremen, engineers, managers and
accountants To hold them on
tnelr present jobs they must be
gwen more money. This, too, will
reflect in prices. From the time
consumers goods leave the pro
duclng factory the expenses of
transportation and distribution
must be added to take care of
business profits and wages Of
those who handle the goods until
they reach the consumer. Facili-
hes and equipment are also nee
esSary.
Railroad cars, locomotives and
ousseS are all made of steel. Of
hce buildings and warehouses are
made Of building materials which
nave been advancing in price.
The result can be only one thing
an ultimate advance in con-
sumer prices. Scarcity Of mate
rlals will first cause substitution
out finally those who desire
scarce articles will pay a higher
pnce. Those who feel they can
hot afford them at the new price
VIII do without. q
Putting it another way, there
VIII be lowering of the standard
n living because advancing prices
VIII take some articles to which
people were accustomed out of
heir reach. Every farmer can be
certain Of advancing prices for
ms products in the immediate flu
.ure. Therefore it is important
Y ouy the necessities of farm op-
Grafton now.