A View of Commodity Agreements

For the last 4 years political leaders have found a new subject on which they can safely generalize wihout creating opposition. That sub- ject is commodity prices. Since the four-fold increase in OPEC crude oil prices, public atten- tion has focussed as never before on the subject of commodity prices. To advocate stabilizing com- modity prices is akin to supporting motherhood or peace or better schooling. Everyone gives lip service to the concept that stable commodity prices are desirable. It is easier to state the principle than to achieve it. Prices that are stable in terms of one currency may be clearly unstable in terms of a different currency. This has become a troublesome matter since 1971, when the world's leading trading currencies were set free to float in relation to each other. To illustrate: consider copper prices in the interval between the end of 1974 and the end of 1977. During those 3 years, the copper price in pounds sterling on the London Metal Exchange rose by 25 per cent. During that period, however, in terms of the USA dollar equivalent, the price was unchanged. And during that period, in terms of the German mark equivalent the price shrank by 13 per cent while the Japanese yen equivalent f.11 1k