Report Outline
Drops in Commodity Prices in 1930
Causes and Effects of Price Declines
Retail Prices and the Cost of Living
The Long Swing of Prices
Special Focus
Drops in Commodity Prices in 1930
The chief economic development of 1929 was the collapse during the last quarter of the year in prices of stocks on the New York market. Sharp declines in commodity prices during the first quarter of 1930 have constituted the chief economic development of the present year to date. They have affected the interests of larger numbers of persons, in the United States and throughout the world, than were involved in the stock market crash; have retarded business recovery from the effects of that crash; and have resulted in a definite slowing up of world trade.
Wheat, cotton, wool, coffee, rubber, and many other leading commodities suffered serious losses in value during the first three months of the present year, and prevailing prices for some of them are said to be well below the cost of their production. Silver and sugar during the first quarter of 1930 made new lows for all time.
So far as immediate effects are concerned [the National City Bank observed in its March bulletin] it is to be considered that last year's crops of grain and cotton already have passed out of the farmers' hands, but in industry and trade the decline of raw materials throws everything into confusion. Purchases of both raw materials and goods are reduced to the closest possible hand-to-mouth system.…Buyers hold off until they can gain an understanding of the new situation or are convinced that prices have reached bottom. Sellers are not always in position to withdraw their offerings and the psychology of panic develops among them. When nobody is ready to buy and holders are determined to sell for what they can get, prices lose all value significance, but they spread alarm. |
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