468 IOWA DEPARTMENT OF AGRICULTURE 



ECONOMIC SITUATION. 



In the discussion of an investigation of living costs which appeared in 

 the last (1919) report of the department, these statements were made: 

 "More than any other factor in lowering prices, however, will be the action 

 of the consumer himself * * * just as long as they continue to refuse 

 to consider the prices asked for goods will high prices continue * * *. 

 The larger responsibility rests upon the buying public; if people would 

 refuse to buy, prices would soon drop." 



Recent developments have proved the truth of these assertions. Today 

 the general trend of prices is toward normal. Flour is about the same 

 or a little lower now than it was a year ago this time. Vegetables and 

 fruits are lower; meat products are cheaper; coffee less than one half the 

 price of a year ago; sugar has declined from 10 to 12 cents a pound during 

 the last few months; cotton, leather, hides, wool and silk have encoun- 

 tered heavy declines in prices. Cancellations of orders have acted with 

 declines in raw materials to paralyze the markets for textile goods. 



Restricted buying by the consuming public is the big reason for these 

 declines. Increased production and other factors enter in, of course, but 

 the unwillingness of the public to pay high prices is the chief factor in 

 starting the downward movement. This refusal to buy articles of 

 ordinary usage is reflected not alone in prices of these particular prod- 

 ucts, but in practically all others. 



The general inclination of buyers to hold off for higher prices has 

 caused a slump in the shoe industry. The same tendency is noticeable in 

 the clothing industry, and it would seem that lower prices are almost 

 certain to prevail next spring despite the statement of some manufac- 

 turers that orders for special delivery will not be made at any great re- 

 duction. Incidentally it would appear that such statements as these 

 would be conclusive to great discontent on the part of the consuming 

 public. Rightly or wrongly, there is a feeling among certain consumers 

 that these manufacturers are merely attempting to hold prices up by 

 artificial means and that the maintaining of these prices in the face of 

 depressed markets in raw materials is not justified. Despite the assur- 

 ances of manufacturers that the cost of raw materials is a small factor in 

 his costs and that labor, the chief item, is higher than a year ago, the 

 farmer, for example, can not understand why he should be forced to pay 

 war-time prices for shoes when hides bring him a greatly reduced price; 

 why he should pay sky-high prices for clothing when his wool is a drug 

 on the market; why he should pay high prices for meat in the face of 

 less than one dollar a bushel for corn; why retail cotton goods are high 

 when the cotton market has gone to pieces. Perhaps manufacturers of 

 these staples believe that conditions justify the maintainence of these 

 prices, but it will take considerable argument on their part to convince 

 the consuming public that this is true, particularly in view of the fact 

 that the cost of raw materials has been given as the cause of high priced 

 staples so frequently in the past. 



Whatever may be the justification for maintaining high price levels on 

 manufactured goods, one thing is certain; the public mind is just as intent 



