WILL PRICES BE LOWER?

Taranaki Daily News, 16 July 1921, Page 6

WILL PRICES BE LOWER?

THE SOFT GOOPS SITUATION. The following is ar copy of a letter received from Mr. J. K. Rennells,. president of :he Prapere’ Ansociatton of New Zealand: — The spectacle of constant sales by traders with ever bigger bargains offered has led many people to think, that prices will continue to decline. But there are a number of factors which make such a probability doubtful, and it is quite possible- thiat .the very opposite will eventuate. The existing condition of continuous special sales has been caused mainly by money tightness and not by reason of goodn being bought at lower prices. The tremendous imimrtations during the last J2 months tried the financial resources of many traders to the utmost. The pressure put on by the banks, which also had limits and the need for cash, has compelled many traders to dispose of their stock, in some eases, with small margins of profit, and in others at n actual loss. It is also to be remembered that the importations were made to look large by the recent inflated values of goods, and in some measure were not due to increases in the quantities of goods. During the last 6 month® there has been practically a cessation of orders for overseas, so that very little stuff is to arrive for the coming season. A® time goes on there i® nothing safer than that there will be an actual shortage of many lines. Though some houses now have the money and want the goods, the lack of bank credits in London practically prevent® them from placing orders of any size. During the next two months most of the wholesale and retail soft goods houses, particularly, will be having their annual stocktaking. This prospect accounts for a good deal of the bargain® being offered now. As both wholesalers and retailers will then have considerably reduced their stocks and cut their losses, it is certain that after, say, August 30, price-cutting campaigns will be at an end. The financial situation of roost traders has improved by the conversion of stock into cash and by the increase of share capital or issue of debentures.

There is a widespread feeling, amongst drapers particularly, that they would like to come to the end of constant sales and resume normal trading.- Possibly many of their own customers will feel the same way about it. Therefore it is probable that with the opening of the spring business trade will operate along the old lines. A report was cabled from London the other day that warehouses’ stocks were getting low and prices showed signs of hardening. This is quite easy to understand when it is known that many factories have been closed down for months.

The coal settlement just announced will make things brighten up in England and will increase the demand fur mill products. It, therefore will not mean that we will get goods at lower prices.

The United States, which went through a period of drastic price-cutting, has now reached a stage of stabilisation, and trade prospects are reported to be improving. As their summer season is now on it is bound to make business better.

The arrangements made for trading with Russia, though likely to lead to only limited transactions at first, are another factor in making a reduction in the price of British products to us unlikely. The long awaited determination of the amount and terms of settlement of the German reparation will improve European trade prospects, and thus benefit Home manufacturers. Again the reduction in London of the bank rate of interest will help to move the wheels of industry and commerce. While the pressure of financial diffi culties during the last 6 months has compelled traders to dispone of goods in absolute disregard of replacement costs •it is ridiculus to expect businesses to continue indefinitely to be run at a loss. Therefore bearing‘in mind al! these considerations it is not reasonable for the public to expect substantia! reduction on present prices. The number of lines which can be bought at prices below those now held in utock is not very extensive. It is quite possible that before the end of the vtwr arrive® money will get easier, resulting in more trading. We. shall then have a scarcity of goods in the Dominion with a combined rush of cabled orders for goods. This can. only mean that prices may go higher for a time until stabilised prices can be quoted and commerce transacted on a more normal basis.