Evening star., 1941-05-25
Prices Debated
By Attacks on
Speculation
Henderson, S Warnings
And Break in Pepper
Stort Slump
Ry FRANK MacMILLEN,
Associated Press Finance Editor.


been quietly blown up in recent
months by spectators and mate
rials-hungry industry, was sharply
Debated this week in the first major
recession this year
The selling drive was short but
very vigorous while it lasted, Things
were on a more nearly even keel
as the week closed
But to many financial men it
appeared significant that so minor
an affair as the black pepper mar
ket. where speculation had been
brisk and where many accounts were
caught unprepared this week by a
Washington dictated boost in mar
gin requirements. should be able TO
touch off a selling wave in raw ma
terial futures.
Wheat. cotton, rubber. cocoa,
hides and many other staples at
least momentarily took a severe
price drubbing.
The pepper affair-Which in
minor degree recalled the 1885 spec
ulative collapse in that commodity
in London's Mincing Lane spice
market-was regarded by most COM
modify traders as symptomatic,
rather than important as of It's own
sake.
Prices of nearly all leading COM
modities, both fOodstuffs and in
dustrial materials. have been
gradually rising since last fall. 1t
was pointed out and the move
ment has been much sleeper since
the passage of the Lease-Lend Bill
in March sent industrial purchasing
men scurrying to market to protect
stepped-up production schedules.
Conferences Called.
Three public warnings from Wash
ington price control authorities in
the past 10 days against speculative
excesSes in commodity futures were
reinforced by private Washington
conferences with futures exchange
officials in which Leon Henderson,
administration price pilot, was re-
ported TO have laid down the law"
This combination appeared to have
been enough. Wall Street men said.
to deprive spectators for the
moment Of their enthusiasm for
commodities which had largely re-
placed stocks and bonds recently
as speculative vehicles
But most observers appeared
agreed that what had happened this
week was a sudden flank attack on
speculative forces. They did not
believe it altered the essential out
look for the price structure. which
would be determined. they said,
by inSiStent need of industry for
all sorts of materials for the arms
program and for Britain.
A study Of sensitive commodity
prices indicates that the greatest
recent rises have been for imported
materials, the least for industrial
raw staples.
Disturbed shipping throughout the
world appeared to account clearly
enough for the greater boosts in
Sea-borne goods. while Government
price controls and the fear that they
would be increased held back the
natural tendency to mark up in
dustrial materials when they were
in such great demand.
Businessmen. however appeared
to be becoming increasingly con-
scious of the problems of supply and
price of staples and the gyrationS
of futures markets this week did
nothing to make them less so.
Regarded as Critical.
Business Week. widely read BY
financial and industrial men. said
today: The rise in the general price
level has attained sufficient momen-
tum and magnitude to become
critical factor in current and future
business decisions"
The magazine saw as a possibility
soon something resembling a sellers
strike as manufacturers became re-
luctant to dispose of finished prod
uctS.
The businessmans attitude, the
magazine said. would be:
What's the Use of selling goods
at a seeming profit above original
cost when the cost of replacement
will be higher than the sales price?
You have paper profit but an out
Of-pocket loss"
How far Government price con-
trolls can be effective in true sell
ers' market" of the sort described by
Business Week has been a question
under active discussion recently bv
both financial men and industrial
officials.
With industrial activity again this
week al new top in the histor,- of
the Nation and with, as one OBJ
server put it, demand pressing
against supply in nearly all basic
industries" the question became ever
more insistent
To some observers the present
Government policy Of setting ton
prices for key materials and regu-
lating supplies appeared adequate
for the time being. though talk Of
much broader or even all-inclu-
sive price ceiling" was factor in
the weeks break in speculative COM
modities.
Wages on Upgrade.
Others. however, pointed to the
TACT wage levels in general appeared
on the rise, that farm prices had
moved up under the promise of
higher Government parity" loans
on principal crops and that taxes
were in the process of being boosted
With these cost factors. all of which
enter indirectly into the prices of
manufactured goods. on the un-
grade. many observers thought the
headaches of Government control
authorities would get worse before
they got better.