Hokitika Guardian & Evening Star TUESDAY, SEPT. 28th, 1920. AT THE PEAK.

Hokitika Guardian, 28 September 1920, Page 2

Hokitika Guardian & Evening Star TUESDAY, SEPT. 28th, 1920. AT THE PEAK.

It was mentioned in this column on 'Saturday that American markets were now very sensitive, and that a break in prices was imminent. In our same issue in the telegraphic columns was a cable message stating the substantial drop in motor car prices. As further confirmation of the prospects of lowered prices there is a reference to the matter in a very definite strain in an American financial journal for last month to hand by the mail received here yesterday. “There is a prevalent feeling among distributors,” says the critic, “that the peak has been turned and that the prices of goods will he lower; a large share of the orders placed in the spring for full delivery have been cancelled, and although the merchants expect to need the goods foi their trade they are afraid to rake them on the old price level. They are largely over the fear that there will not be goods enough to go round.” This indicates that stocks are at last accumulating, and the- supply' is going to be superior to the demand, naturally a prime factor in the cofitrol of prices. Another indication of the surplus in stock 'being created, is the idling of much machinery in the United States. Particularly is this so in the textile trades. Here again stocks are increasing and require to be unloaded. No doubt they were built up on a high wages basis, and a. serious slump would mean a heavy loss if the firms went on producing at the present cost, only to sell at a deflated price. It is risky to allow mill machinery to stand idle, but the proprietors are finding themselves between two minds, and they are preferring to risk their machinery rather than flood the markets with goods. This, of course, is an artificial stop-gap which cannot stand for long. The machinery must be used and labor will be seeking employment. A basis of production at a lesser cost will be sought so there will he a compelling circumstance towards cheaper goods. With regard to the slump in motor cars this can be well understood. During the war many of the workshops were converted for munition production, and

the manufacture of cars became a secondary consideration. What were being built were the cars and machines essentially required in the main for war service, and so the public or private vehicle became scarcer and scarcer, and naturally dearer. -The armistice ended the tension of war production in regard to flying machines and special cars, and the workshops got back to their old jobs as quickly as possible. Their staffs were numerous and their production was greater than pre-war times. Evidently the supply has exceeded .already the demand, and to clear the goods and keep the vast workshops going, cheaper prices must prevail. So leading firms are announcing a substantial cut in prices. What is happening to-day with regard to motor cars, will happen with reference to other commodities, and the deflation will reflect itself round the world. Shipping is the esseniion agency to give I relief overseas, for if the goods can be freighted the colonies will soon he getting the benefit of the drop in prices, which heretofore have been at the peak. How soon the same principle will apply to foodstuffs, rests la rarely on the time when 'Russia will-again begin to be a contributor to the world’s needs.