IN THE 159-YEAR HISTORY of The Journal of Commerce, its roster has included some distinguished economists, among them Parker Willis, the author of the Federal Reserve Act, and Jules Bogen, the eminent New York University professor and compiler of the definitive guide to business and finance.
Not least among these was J. Roger Wallace, who served this newspaper as associate editor and economist from 1947 to 1974. A graduate of Harvard and Columbia, he built a career during the 1930s as an agricultural economist and commodities expert, working at various times for the New York Cotton Exchange, the Federal Farm Board, the Agricultural Adjustment Administration and Carl M. Loeb, Rhoades & Co., the investment banking house. During World War II he was chief economist, section chief and director of the general statistical staff of the War Production Board and afterward chief economist and section chief of the Foreign Economic Administration.Here he is remembered as a helpful man with a good sense of humor. A perennial market bear, he was also a contrarien. Among a multitude of interests, he was a member of the Scottish Society and of the Patriotic Society in Westchester County, which each year re-enacts the Battle of White
Roger Wallace's chief legacy was The Journal of Commerce index of 15 industrial materials, an indicator that over the years has had a remarkable record in tracking the ups and downs of inflation. Another distinguished economist, Dr. Geoffrey Moore, has just completed a year-long revision of that index. A former commissioner of labor statistics, Mr. Moore heads the Center for International Business Cycle Research at the Columbia University Graduate School of Business. Among other things, Mr. Moore is closely identified with development of the government's index of leading indicators. It is not excessive to say that he is probably the leading economic statistician in the nation today.
What Mr. Moore and his colleagues have done is to bring the materials index up to date, adding some commodities that have gained in importance in recent years - crude oil, aluminum, plywood, red oak flooring, benzene and corrugated boxes - and eliminating others that have faded - turpentine, linseed oil and silk. They constructed the index back to 1948 and found that it had anticipated every major reversal of price trends over the past 40 years, usually by less than a year.
The present slowing of price increases that began in 1980 was foretold by the index a year earlier. Like the stock market, however, the index occasionally registers turns that are not mirrored in economic behavior.
The index represents a cross section of the market for industrial materials assembled on the basis of economic significance and reliability. Computing it each day involves elaborate statistical procedures designed to assure that price movements in no one commodity dominate.
What is the index telling us right now? Is renewed inflation in the cards? So far it is signalling continued disinflation although there are some indications prices may be bottoming out. At some point, however, a turn is certain to come. And the index will be watched for the indicator.
Publication of the new index begins today.