PRICES DECLINE.

Taranaki Daily News, 29 November 1920, Page 5

PRICES DECLINE.

.GENERAi/wHOLESALE FALL SIGN OF CHEAPER LIVING. _ BUSINESS DEPRESSION FEARED. By Telegraph.—Press Assn.—Copyright, Received Nov. 28, 5,5 p.m. London, Nov, 27. A general decline in wholesale prices of commodities is regarded as a most encouraging sign in the business world. The process of deflation may he a long one, and must be accompanied by a period of business depression, but it should ultimately effect a reduction in the cost of living, entailing a Jower basis of wage* and a more reasonable attitude on the part of Labor, thus enabling u s to produce more cheaply and regain the markets which we have been losing. But so far the reduction has not spread to the retailer or the consumer.

There is growing stringency in the money market, but 'large Government disbursements on December 1, including £50,000,000 interest on the War Loan, should considerably ease the situation. The banks, however, are likely to restrict loans in December in order to conserve' their cash resources to make a good show in their balance-sheets.

Foreign exchanges fluctuated considerably, but the movements generally favored London. The German mark was very erratic, closing at 245 after touching 215. All departments of the Stock Exchange show a. marked shrinkage in values.

Forced liquidation is evident in many quarters. Owing to the restriction of credit traders find it exceedingly difficult to finance the carrying of lieavy stocks, and the decline in the prices of commodities will not allow a profitable realisation of holdings. The only alternative is to liguidate Stock Exchange securities.

The wool conditions at Bradford show little change. Top quotations are nominal, with an easier tendency. The only purchases made were in i=mall quantities for immediate requirements. The "lockup" continues at the retail end of the trade, preventing the flow of business. There is not yet sufficient confidence in values, particularly Government reserves, which are relatively higher than in other markets. The raw material end of the trade is in a rather happier position and is more hopeful, and though little business is being done here there is a feeling that the worst is over as resards readjustments of prices. There is a much more confident feeling in the United States after the elections, and inquiry is improving, some orders coming along. Germany is now operating in erossbreds.

Wheat continues very slow of sale in expectation that the' Royal Commission will shortly reduce the price, following the reduction of -Is on imported flour commencing on November 29. It is stated that Canadian wheat could be purchased here, if the market was free, 18s below the commission's present quotations.

The depression in freights has become general. All markets are over supplied with tonnage, and it is expected a considerable munber of steamers will be laid up next week, as it is cheaper than running them. The Australian wheat committee is holding off the market, but fixtures have been made for France on France's bams, which at the present exchange is equivalent To" about 12."5. Probably steamers could be fixed for January-March loading at 120s.—Aus.N.Z. Cable Assn.