Evening star., 1948-02-15
Price Drop Should
Ease Wage Demands;
U. 5. Bonds Stronger
By chorles T. Speore

NEW YORK, EeD. l4.-1G Is pos
sible to see some gains for the
national economy in the severe de-
clines of the past two weeks in
commodity prices.
Already the grain and livestock
markets have slumped enough to
compel readjustment In food costs.
This will give the consumer
brighter outlook on life.
1t should modify the demands Of
those sections of labor long PLAN
ming a third wage-boost campaign
inf the spring based on the cost Of
living, which now, however, is fall
ling rather than rising.
This has given more courage to
bankers who feared for the govern
ment bond market il imitation were
not checked.
It eases the pressure in Washing
ton for a maximum appropriation
for the Marshal Plan based on the
years highest food and materials
prices and budget allowance at an
even greater cost.
Inventory Losses Cited.
The adverse effects for business
and for agriculture are in the value
shrinkages of inventories of goods
held in warehouses and in the lower
appraisals on the farm of wheat,
corn, cotton and livestock.
Many corporations have set up
reserves against depreciation in
goods now in warehouses. In this
respect they are better fortified
than in 1929 though the commodity
price decline is claSsed as one of
the shareest, for so short time,
on record and, therefore, more diff
cult to deal with.
Farmers claim losses of 5000 ,000,-
900 in the IS to 70-cent drops in
wheat and corn. This, however, is
paper loss. They still have sub
stantial profits in their unsold grain
and have banked heavily from sales
we'll above the two-dollar level.
Cheap cotton, wool and hides will
tend to move some of the high
priced clothing with which retail
stores are burdened. Federal taxes
may not be reduced as much as the
Republican Party had hoped for.
Pound Is Unsettled.
From the opening market session
this month to the eve of this weeks
holiday the average decline in stocks
amounted to eight points. This ur1-
settled markets in London, Canada,
Australia and Holland.
Associated with 1t was the first
dislocation OF the pound sterling
since it was 'pegged" at S4.03-A4.
On Wednesday forwards" dropped
to $685.. The unofficial rate is
$3.50.
In spite of all Sir Stafford Grips
proclamations for maintaining the
pound at $403-A. opinion here Is
that it eventually must be devalued
if Great Britain is to maintain her
banking authority in Europe.
The Canadian dollar, which
moved up sharply after price con-
troll in the Dominion was resumed,
is again at a heavy discount. Among
the causes given for the slump in
commodities in this country Is one
from Paris predicated on devalua-
tion of the pound and other cur
rencies which would reduce the pur-
chasing power of European nations
in the American market.
A. T. & T. Earnings Cut.
This week the American Tele-
phone & Telegraph Co., the premier
utility in the United States, pub
nshed its report for 1947. This
showed s766 earned per share COM
pared with $10.23 in 1946.
The high 1947 price of this stock
was l74a. After holding at frac-
ton above $50 in the second week
of February it fell under that figure.
An increase of 50 per cent in fixed
charges. and higher labor and ma
terial costs. cut into the income
available for dividends. There is
no intention Of disturbing the pres
ent $9-a-share rate. During 1947
the company added 27,714 new
names to it's ownership roll, now
totaling 723000.
The unsettlement Of the stock and
commodities markets brought to
halt pending negotiations over new
issues of securities, one high
grade industrial preferred stock.
The municipal market faces two
States veterans bonus loans for
which banks are expected to bid.