COMMODITY PRICES

Southland Times, Issue 18818, 11 May 1920, Page 3

COMMODITY PRICES

MOW THEY VARIED IN THE VAST. For years past the London Statist h:us published' statistics as to the values of standard, commodities, embracing vegetable and animal foodsluhs, sugar, corfee, tea, minerals, textiles and sundries. These art- grouped under '’foodstuffs’ and materials.” At the present moment, when the question of high prices and the prospects of their continuance or otherwise are exercising the public mind, a study of the following unique table will be found unusually instructive. These figures arc taken from the StatDt of January 10 last, and represent the annual index numbers a? compiled by that paper over the past 74

*Jevons’s numbers adjusted, t Subject to revision. A careful examination of this table reveals how very sensitive “values” are to unusual conditions of trade, etc., such as a rise in times of war or industrial stress—i.c., to the increase of purchasing power by the creation of paper money in war time, or to a contraction of the same when the circulation is again reduced to peace needs. The years of ISO 9to 1818, also included, show the of the Napoleonic wars, while in 1846 values were about what wo used in pre-war days to regard as normal. The financial crisis in the United Kingdom in 1848 caused a drop in values of 17 points, but they slowly recovered till 1354, when the Crimean war sent prices soaring. However, the return of peace and the settlement of the Indian Mutiny brought about a fall of some 10 points, to 91.

Values slowly advanced again till 1862, when they showed the effect of the American civil war, which broke out in 1861, and lasted for four years. Thereafter while a reduction in values took place, it was of no great moment, and quickly gave place to a sharp advance in. 1871, due to the Franco-Pnissisn war. Though this war was of short duration (less than a year), it will he seen that it had a serious effect, inasmuch as it was not til! the year following its close that prices reached their highest level. The year 1874, however, saw a heavy fall, succeeded in 1875 by another readjustment. A long period of peace followed, during which we see the depression of the ‘‘nineties” reflected. However, the year 1900 saw a comparativly sharp advance due to the 3oer War, but the effect on values was short lived, and after settling down to 69 in 1902 a gradual advance took place till 1007. In that year a slump, due to a sharp financial crisis in the United States, broke values by seven points, after which a gradual uplift took place till 1914. Be.fore leaving the pre-war figures, it should be mentioned that the low standard of values and the. gradual increase after the Boer War are undoubtedly as sociated with the movement of the gold production of the world during those periods. The effect of the Great War is thrown into strong relief in these figures, while later statistics show that the actual position at December 31 last, was 235 against 205 for the average of the whole year, and even this has since advanced at the end of January by a further ten points. Judging by precedent, the advance since the signing of the armistice was quite to be expected, and the question now is how long will the present level of values last. We are dealing with factors to-day, however, which arc quite without precedent. viz., a world-wide inflated currency—a Government expendiri - nearly every country of the world to tent never before known, and showing little signs of real contraction—prices on an unprecedented level, a continued shortage in production and lastly a wage lervel undreamed of before the war.

We also have commerce organised as we have never known it before, and markets are accordingly more readily affected by, say, exchanges or some other cause in another part of the world maybe. That we shall see a fall in the values of commodities will be conceded at once, but how far this readjustment will take, place is difficult to say. Governments who arc in power by popular vote are notoriously loth to give up a policy of extravagance and bring their respective currencies within the normal needs of the public. Expenditure on a war basis, cannot, however, be continued indefinitely, but Government spending on a large scale is likely to continue for some time, and will make for the maintenance of prices accordingly. Again, while wages must fall with the loss of the present, fictitious prosperity, this will only be with the force of circumstances and one rather wonders how far wages boards and the like will stand the test of really bar! times. In any case, the return to normal conditions will bo delayed to some extent till wages are readjusted to a newer and lower cost of living. That production will overtake the demand may be taken for granted \vc believe, and that over-production will follow is certain. We believe ship building will prove a shining example of this. With so many abnormal factors to be considered and undoubtedly others which are maybe, beyond the wit of man to foresee at present, none can prophesy with certainty ns to what level post-war standard of values will reach. As a pure guess, however. we should say traders are justified in thinking that within three years from the pre.-i nt we shall see a reduction to. say, 135 in the world prices of commodities. The question is frequently asked—Have values reached the top? We believe that broadly speaking they have, and base our belief on the fact that the dollar exchange position is slowly recovering. This recovery' is destroying the opportunity America had of buying the world's goods at a price of up to 30 per cent above their true value, and thus of late we have seen a reduction in many goods which she buys abroad. Those goods she exports are gradually becoming cheaper to the import'!'" countries, for the loss on the exchange to he added to the cost of purchases is not now so great as it was.

years; — Yot. Ave ■age No. Y ear. Average No 1919 205.6t 1880 88 ISIS 198 1879 S3 1917 175 1878 87 1916 130 1877 94 1915 10S 1S7 6 95 1914 85 1875 96 1913 85 1S74 .. 102 1912 85 1873 .. Ill 1011 80 1,872 . . 109 1910 78 1871 .. 100 1909 74 1870 96 190S 73 I860 98 1907 80 1S6S 99 1906 77 1867 .. 100 1905 72 1S66 .. 102 1904 70 1865 .. 101 1903 69 1864 .. 105 1902 69 1863 .. 103 1901 70 1862 .. 101 1900 75 1861 98 1899 6S I860 99 1898 64 1859 94 1S97 62 1858 91 1S9 6 61 1857 . . 101 1895 62 1856 . . 101 1S94 63 1855 . . 101 1893 68 1854 .. 103 1S92 08 1853 95 1S91 72 1852 78 1S90 72 1851 75 18S9 72 1850 77 1S8S 70 1849 74 1887 68 1848 78 1SS6 69 1847 95 1885 72 1846 89 1884 76 ISIS .. 159* 1883 82 1810 .. 171* 1S82 84 1809 .. 189* 1SS1 85