Evening star. [volume] (Washington, D.C.) 1854-1972, 1948-02-10
Writer Recalls Tait's
December Prediction
OF '4S Price Break
ohioon Reported Saying
Drop Would Justify
His Anti-InfIution Bill
By David Laurence

prophet OF IOrecaSCer OF economic
trends-at least his forecasts made
last December as to what would
happen to prices in the early part
Of 1948 seem to have come out right.
This correspondent about go days
ago was discussing with the Ohio
Senator what the Republican atti-
tude toward price controls was likely
to be, and Mr.. Taft said then that
the bill being drafted for passage
at the special session would furnish
all the anti-inflation power that
would be needed.
Asked for an explanation as to
why he was so confident, Mr.. Taft
said there was bound to be break
In prices in the early part of 1913.
! For one thing, he foresaw the pay
ment by the Treasury of $1,000, 000,-
4 900 on the national debt as likely to
be deflationary influence. He said,
too, that farmers were finding wheat
too expensive to feed cattle and were
getting ready to sell it.
More Wheat Than Forecast.
What has happened Is that wheat
Is more plentiful than was expected
and because farmers have sent more
wheat to market than was antici-
pated, the law Of supply and de-
mand takes immediate effect. Prices
have dropped as they always do
when there is more of crop than
had been anticipated.
While corn is normally the live
stock feed, both corn and wheat
have been so. high-priced that 1t
paid farmer % sell grain rather
than to feed it to cattle or hogs. A
price break tended to bring corn
down more nearly to level that
would make feeding profitable.
But prices of hogs and cattle have
broken, too, and there is undoubtedly
In process now a trend toward gen.
eral readjustment of agricultural
prices.
Anyway, there is enough wheat
available for export now. 1t doesn't
seem possible that all the hue and
cry about controls can get very
far in the political arena as whole
when commodity prices are drop
ping without any controls being
imposed
Further Price Drop Seen.
The case for the old law of supply
and demand, as corrective in
huence far more potent than all
the Government bureaus that can
be created. is now stronger than
ever before. The principal cause
Of the unbalanced grain situation
has been the bad weather that
brought a short crop in corn last
year.
All the Government controls
known to man will not bring an
abundance Of corn II the weather
man doesn't cooperate, too.
Americas increasing crops, with
unprecedented quantities for export
over and above domestic needs, will
tend to bring a further decline in
price when European harvests get
going again. There soon will be
talk of governmental policies look
ing toward sterilization so that
prices will not fall too far.
The drop in grain prices will I'M
doubtedly be related to estimates
of what the rest of the world can
do to bring more abundant supply
of food materials. In the United
States drop in agricultural prices
cannot but affect the demands OF
labor unions for a third round of
wage increases. That's why some of
the shrewder labor leaders are
turning their minds toward fringe
demands" and particularly to health
and pension plans. This affords
the leaders a chance to get some
thing for their members and yet
keep in step with what soon must
be a restraint on the upward spirals
Of imitation.
Depression Factors Cited.
Experts in long-range economic
trends have frequently said that a
depression in America will come
when two major factors are present
"a serious drop in farm prices and
. serious drop in exports. 1t has
been said that our 1920, 900, 900 900
economy can stand the strain of
one of these at a time, but not both
of them.
The Marshall Plan contemplates
keeping exports at levels not far
different from those at which they
have been running in the last half
of 1947, so this factor will not be
defationary.
The adjustment in farm prices
may prove salutary because, if a
depressing hand can be placed on
the cost Of living by these natural
factors, there Is likely to be trend
toward stability of prices generally,
and this would be the greatest in
centive to business production that
could be introduced at this time