The Spiral Trail

Like thrifty housewives on a shopping tour, a congressional subcommittee swept on from New England into New York last week. It fingered and compared price tags on hats, sweaters, kitchenware and many other items. In its hunt for the cause of the latest upsurge in prices, it listened to scores of witnesses. After two weeks of hearings, the committee came to one conclusion: the blame could not be placed on middlemen or retailers.

"Everywhere we have gone," said Vermont's Senator Ralph E. Flanders, machine-tool manufacturer, ex-president of the Federal Reserve Bank of Boston and subcommittee chairman, "we have found that the margin of profit per dollar of sales has been very narrow." Robert A. Seidel, vice president of the W. T. Grant Co. (500 stores), testified that Grant's margin of profit in the first six months this year was only 3.1% of the consumer's dollar, compared to 6.4% in the same period last year. The committee also pinned down another fact: despite all the hullabaloo, the latest price rises have been confined chiefly to food.

Up Margins. The blame for the food rise, said Flanders, had been chased "pretty well back to the commodity exchanges and the farmers." The subcommittee did not know what to do about the farmers. But it wired President Truman to find means to curb speculation and margin trading in commodity exchanges.

The exchanges, keenly aware of swelling congressional talk of more governmental control, voluntarily took a small step towards slowing down speculation. The Chicago Board of Trade ordered margins increased on a sliding scale. For every 10-c--a-bushel increase in the price of grain futures, margins must, in effect, be increased an additional 5-c-. But the Board of Trade stuck to its contention that Government buying of grain for export was chiefly to blame for food prices, and not speculation.

Up Prices? This was clearly shown last week. The Cabinet turned down the Department of Agriculture's proposal that only 350 million bushels of grain be exported this crop year. Instead, it approved the State Department's request for 475 million bushels. After the decision was announced, grain prices, which had begun to rise on reports of frost, spurted up sharply.

By week's end, wheat had recovered three-fifths of the ground that it had lost the preceding fortnight. Some wholesale food prices, which had started to drop in keeping with the drop on the exchanges, also went up again. The rise continued as trading opened this week. As long as the Government insisted on enormous food exports, despite the bad corn crop, traders were sure grain prices would remain high or go higher.

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