The Times. Published on Tuesday and Friday Afternoons. FRIDAY, MARCH 18, 1921. FALLING PRICES.

Franklin Times, Volume 9, Issue 617, 18 March 1921, Page 4

The Times. Published on Tuesday and Friday Afternoons.

FRIDAY, MARCH 18, 1921. FALLING PRICES.

The London Times, writing editorially, has the following pertinent statement regarding the steady decline of prices in England. In a smaller, degree the same influences are at. work in the Dominion -and we consider the ai tic!-.? from the Times to warrant sufficient local interest to be worth reprinting:- -There are welcome signs that retailers are. beginning to realise that by reducing prices they may render valuable help in removing the block in bus,ness which is a principal cause of the great growth of unemployment. At

no period since the beginning of the war has industrial and trade activity been so severely restricted as it is at present. The demand for goods has withered to such an extent that the wholesale markets are in a state of actual depression. Prices in these markets have fallen heavily: merchants have been caught with large stocks on hand, bought at high prices, which can only be sold at low prices; mortality in business has in consequence increased,, and is now up to the pre-war level; factories and works which a year ago were humming at the maximum of capacity to meet an apparently insatiable demand, are now closed down; goods have been piling up in warehouses; cash has thus been converted into unsaleable stock, and credit has been frozen. As purchasing power in the aggregate has not sensibly diminished, it follows that the decrease in domestic demand is due to a refusal to spend This is to be attributed to the fact that the fall in wholesale prices has not been followed by a corresponding reduction in retail prices. Up to the present the downward adjustment of prices has been very one-sided; the fall in wholesale commodity prices has been reflected in only negligible proportion in the retail shops. Many people have suffered an actual contraction of purchasing power, and are unable to afford current prices. They are thus forced to go without some things. Others can buy but will not, in anticipation of lower prices. Unquestionably a redistribution of wealth is going on; the great mass of workers who during the war period earned large wages, spent them, and the money has gradually found its way, as it invariably does, into the hands of those who save. As the savings accumulate they will be invested in new enterprise and will give fresh employment, hut for the moment confidence is lacking because high prices and high costs of production have checked demand. The retailer is undoubtedly feeling keenly the cold blast of reaction. But he would be wise to temper it by reducing prices in order that the flow of trade may be resumed. It should prove more profitable for him to “cut” a loss on existing stocks than face a long period of stagnation.

“We nothing extenuate, nor aught set down in malice.”