When will prices strike the down grade? This is a question that is of immediate, absorbing interest to practically every business man and to consumers throughout the United States. It also interests our labor leaders, for the future course of prices will influence not only wage demands but also the progress of radical against conservative leadership. On what happens to prices, furthermore, hangs the rate of politicians.

To state an opinion on the probable course of prices in the immediate future is hazardous. Nevertheless some facts stand out quite clearly.

Federal Reserve System Responsible.

There have been numerous contributing influences to bring about high prices--such as the export demand for some articles, the shortage in the supply of certain raw materials, and so on. Nevertheless, the chief reason for the general rise in prices has been the inflation of credit and currency. The process of inflation, through the working of the Federal Reserve banking system, has provided a large additional buying power without a corresponding increase in production. As has always taken place under similar circumstances in the past, inflation of credit and currency has resulted in inflation in prices. The Federal Reserve system has substantial merits; nevertheless, its operation, with low rates for re-discount of loans on government bonds, brought about inflation. Perhaps under war conditions this result could not wisely have been avoided. It such be the case, these high prices should be accepted as a necessary consequence of the war.

In November, 1919, the Federal Reserve banks began to increase their rates of re-discount. Since January 23, 1920, the rates have been sufficiently high to check further inflation, temporary at least. Although its effect on commodity prices inevitably is manifested more slowly than its effect on the stock market, this increase in re-discount rates apparently has begun to exert some influence on commodity prices. It appears probable that within a few months commodity prices will start downwards toward a level that is more nearly normal. This will mean not only a relief to consumers, but also better labor relations and in the long run a sounder basis for business than now exists.