Evening star., 1941-01-01
Inf|aiionarY Spiral
OF Prices Regarded
As improbable
Business and Federal
OfficiuIs Join to
Avert Sharp Rise
CBy Cambridge Associates \


At this point in the progress Of
the last World War, commodity
prices were on the move, and an
infatonary spiral which will be long
remembered was gathering force.
Placing reliance on history along
would lead to the belief that a rising
cost Of materials Of industry is
slated for l94l. From the present
viewpoint, however, it can almost
be stated fatty that no such trend
will play a part in the next II
months of American history.
Reasons for this statement are
many. From an immediate stand
point, the most important reason is
that America capacity to produce
most raw materials is well above the
current rate Of use, and only psyCho-
logical forces could set of a boom.
As the defense program and the
| industrial aid to Britain progress,
however, this reason Will gradually
| disappear It Will be replaced with
a determination on the part of busl-
ness and the administration alike
that no real commodity initiation
shall disrupt our economy. Such
a determination IS already evident.
Price Control Moves.
Demand for copper has been as
! strong as that for any commodity.
In the World War period prices
were allowed to move up as con-
. sumption increased, 50 that pro-
/ gressively higher and higher-cost
. production facilities would be
worked. In the present instance
, the Government has arranged to
. purchase a part of industrial re-
quirementS from Chile, where
/ American-oWned copper mines can
yield the metal at a cheaper rate
than our domestic mines. The 4
/ cent per pound tariff levy, originally
placed on imports for the proteC-
ton Of domestic producers, will be
paid by the Government to the
/ Government, thus washing itself
out. Then, according to the plan,
the foreign copper will be supplied
to American users at the prevailing
domestic priCes-wlth profit to
the Government. Thus the OPEN
ing Of domestic high-Cost mines Will
be postponed.
Each commodity is a problem unto
itself and the formula which works
so neatly for copper may be entirely
useless in another instance. Still
the determination is there to han
Ole each commodity in the best
possible way. AS the necessity
/, asserts itself, Government control
Of prices appears to be ahead.
Lumber Prices and Problem.
Up to the present time the only
increase in prices that has drawn
attention and disapprobation is that
a in lumber and other building ma
terials. Fundamentally, there is no
2 reason for a shortage of lumber,
? but the sUdGcnness Of the demand
. for the construction Of cantOnmentS
as well as a full-AeGsed boom in
industrial construction threatened
: existing supplies on hand, and the
time factor involved in replenish-
ing that supply has led to a bidding
: up Of prces. Given time, there is
5 q possibility that this particular
? situation viii straighten itself out.
This is probably the reason that no
strong action is as yet launched.
! English Effort Watched.
: Wholesale prices in England have
,, increased in the past year by an
: approximate 40 per cent. As yet no
: control measures of compulsory
+ nature have been placed in effect,
5 although complaints have been
heard and agitation for increased
wages to offset the higher cost of
living is becoming a problem. It
= appears likely that price control
moves will soon be instituted there
, and our observers are ready to re-
: port on effectiveness Of such meas
4 ures as are instituted, for our own
future use. if necessary.
One field in which no problem
Of high prices is likely to create
: trouble is that of agricultural prices.
As is we'll known the warning coun-
tries have limited their purchases
: OF such commodities in this coun-
5 try III favor of industrial products
and have succeeded in filling Their
= needs in countries where British
? pounds are accepted. Consequently,
Z our cotton problem is one Of ever
{, increasing surpluses. which even a
, record rate Of domestic Consump-
!, ton has failed to alleviate. Grains
; and hogs are oVersupplied also to
3 a lesser degree.
? Rather than support these prices
= artlficially the Department of Agri-
q culture now expects to allow them
to seek a more nearly natural level
and make up the difference through
3 an assessment on domestic process
I sCrs. There are indications that
Z this plan has not been generally ac-
= Cepted by the various farm organi-
zations and its status is therefore in
? doubt, but if it succeeds. the crop
loan program will be scrapped. Net
a cost to the manufacturer or con-
= sumer, however. should be little
changed under either system.