Evening star., 1941-07-01
Attention Is Centered
On Battle Of Prices;
New British Loan
Unbroken Rising Trend
Of Indexes Disturbs
Economic Observers
By GEORGE T. HUGHES.

NEW YORK, July l (N.AN.A).-
The situation commanding the most
attention continues to be the battle
of prices. Other topics widely dis
cussed include the effect of the
plan to make r. F. C. loans on
British investments in this country
instead of allowing them to be
liquidated in the market, the dam
ger of misleading both investors
and labor by the practice of cor
poration accountants in accruing
taxes at present rates without max
ing adequate provision for the in
creaSes which are sure to come, ana
the banking situation, which re-
veals excess reserves at the lowest
for a year and a half, while COM
mercial loans are steadily rising.
Voluntary compliance with the
requests" of the Price Control Ad-
ministration has been tried but with
only partial success, and the out
look is for legislation TO make 1t
mandatory. Washington advices
say President Roosevelt will ask
Congress for price-flxing law.
The struggle involves for the most
part semi durable consumption
goods. automobiles, automobile ac-
cessories, furniture and so on.
Indexes Advance Steadily.
Meanwhile the price indexes
which cover mostly raw materials
are advancing steadily. The week
ly compilation of the Bureau OF
Labor Statistics shows all commodl-
ties only a little over a point below
the high of 1887. which was the top
since the depression. They are up
more than 10 points on the year.
The daily record of the same bu-
reau shows prices up almost so per
cent since the outbreak of the war.
In themselves the figures are not
especially alarming; it is the un-
broken trend which 'diSturbs.
At best the problem is extremely
difficult Of solution. What is need
ed is a consistent policy. of which
so far there is not the slightest in
dication. Prices cannot be fixed
piecemeal without regard to costs
or to the effects on production. The
greatest absurdity is freezing prices
of farm products at high levels while
trying to freeze manufactured arti-
cles at low levels, to allow continu-
Gus advances in wages and TO give
no effect TO the resulting increase
in cosLs.
r. F. c. Loans Favored.
With regard to the proposed r.
F. c. loan on British investments
Secretary of the Treasury Morgen-
thau is said to be favorable, al
though he would much prefer that
such assets be sold here. The Sc
curities markets are pleased with
the prospect of relief from any
such liquidation. The one point
which is overlooked, probably be-
cause it is not of immediate i'm
portance. is the question of trade
with Britain after the war, when
at the present rate her dollar re-
sources will have been exhausted
and she would be able to buy Ameri-
can goods only with the proceeds
of the sale of British goods.
The accounting difficulty was dis
cussed at the recent conference OF
the National Association OF Cost
Accountants in this city. Paul d.
Seghers pointed out that the set
ting up of tax reserves at 1910 rates
in quarterly statements was likely
to give false impressions to stock
holders and to labor alike. The
former were led to believe their
prospects of dividends are brighter
than they actually are, and the
latter were persuaded that industry
could well afford to raise wages
indefinitely. No one knows just
what tax rate corporations will
have to pay in 1912 on l94l earn
ings. but every one knows it will
be higher than the schedules pre-
scribed in the present law.
No more is heard about the neces-
sity of raising reserve requirements.
However, the question is raised in
some quarters as TO the effect on
money rates of the drop in excess
reserves in recent banking reports.
Such concern seems unwarranted.
There is no sign of any substantial
hardening in money.
XVd