Index 120 110 100 90 WHOLESALE PRICES OF COTTON AND THREAD (United States Bureau of Labor Statistics) 1926-100 8 Cotton 70 60/ 50 40 301 Thread 1929 1930 1931 1932 1933 1934 From September 1929 to February 1933, cotton declined 68 percent in price, while thread declined only 4 percent. From February 1933 to April 1934, cotton advanced 97 percent, but thread declined 2 percent. FIGURE 18.- Wholesale prices of hides and skins and boots and shoes (United States Bureau of Labor) 1929 1930 1931 1932 1933 1934 From September 1929 to February 1932, hides and skins fell 63 percent, and boots and shoes 21 percent. With the 69-percent advance in the price of gold, hides and skins rose 54 percent; boots and shoes rose 17 percent. After a period of incomplete deflation a rise in the price of gold causes a rapid increase in the prices of those commodities which declined sharply and little change in those inflexible prices which lagged in the price collapse. A rise in the price of gold relieves inflexible prices from falling. TABLE 1.-Index numbers of the price of gold in various countries Switzerland and Holland still maintain their pre-war currencies. Their price of gold has continued at 100. France, Italy, and Belgium raised the price of gold previous to the depression so that their prices are higher than before the war, but have not been changed since 1929. TABLE 2.-Commodity prices in currency and in pre-war gold currency No country can keep its prices in gold far out of line with world prices. Prices in the United States are about as much above the world level as we have raised the price of gold. No further important advance is to be expected unless there is (1) a worldwide rise in prices in gold, i. e., a fall in the value of gold; or (2) an increase in the price of gold. Since February 1933 the general index for Italy has fallen 3 percent, for Belgium 11, and for France 14 percent. Conditions in these countries have grown steadily worse. The United States Bureau of Labor all-commodity index, which includes many prices that had not declined much, has risen 32 percent. Raw materials rose 59 percent. The Journal of Commerce index for 30 basic commodities has risen 98 and prices paid to farmers 95 percent. Those things which fell most have, in general, risen most, but are still low compared with things that fell little. TABLE 3. Comparison of business activity and currency prices of gold 1 Comparative Recovery, New York Times, p. 14, Nov. 3, 1934. 149 282 128 200 125 201 110 179 108 174 105 163 87 100 85 167 76 100 74 126 |