The Dominion. THURSDAY, OCTOBER 7, 1920. PORTENTS IN BRITAIN

Dominion, Volume 14, Issue 10, 7 October 1920, Page 4

The Dominion. THURSDAY, OCTOBER 7, 1920. PORTENTS IN BRITAIN

At times when affairs of commerce- and industry are in a state of rather precarious balance more alarmist reports are sometimes spread than the actual situation warrants. It may bo as well to bear this in mind in reading cablegrams liko that which stated _ yesterday that there are further indications of trade depression in Great Britain and more reports that unemployment is increasing. While, however, it would be foolish to assume that tho worst is bound to happen, there is no doubt that a critical position has arisen in the Mother Country ,_ and ono in which the people of this Dominion and others have more than a sympathetic interest. The cablegram just quoted credited the secretary* of the National Union of Manufacturers with the statement that British manufacturers are finding it difficult to secure fresh business, chiefly because they cannot compete _ with foreigners, especially the Americans, Germans, and Japanese, owing to the excessive British costs of production. Unless conditions have changed'greatly for the worse_ during the past few weeks, this is an exaggerated presentation of the facts. The difficulties arising from high cost of production of course exist, but they are by no means confined to Groat Britain. _ In spite of these difficulties, British exports this year (with the exception of coal) havo shown a healthy rate of increase. The position definitely disclosed in tho United Kingdom is that of a hesitancy in trade, accounted for, according to some wellinformed authorities, by tho' fact that buyers are holding off in anticipation of a continuation of the decline in wholesale prices recently registered. There are distinct grounds for believing that the upward movement in prices which has been proceeding almost without interruption since the outbreak of war has passed its peak-point. Suggestive evidence to this effect is supplied in a table compiled by. the Economist. It shows the monthly, movements in wholesale prices since tho Armistice, the figure at that date being taken as 100:—

1018 Nov 100 1919 Sept 10G Dec 98 Oct 109 1919 Jan 91 Nov. 112 Feb 93 Deo 118 March ... 92 1920 Jan 125 April .... 911 Feb.' 131 May % March, ... 131 Juno 99 ' April .... 132 July 101 May 132 August .. 105 June 126 A further but very slight decline was registered in July. The check to inflation, hero indicated is reasonably attributed to the cessation of Government borrowing and tho restriction placed on the issue of currency _ notes, and to tho recent increase in production to which trade and other statistics bear witness.

In an optimistic estimate of the outlook the monthly review issued bv Barclay's Bank observes that:

Fortunately there aro comparatively few speculative, positions remainin',', and tho country is, therefore, in a good position to face a gradual decline in prices without tho risk of enforced liquidation causing a procipitato fall such as would produce'a crisis with its aftermath of depression and unemployment.

The conditions of a comfortablo departure and development from existing conditions are here accurately suggested. A suddcn_ and. pronounced drop in prices in tho United Kingdom would be.an almost unmixed misfortune to all concerned. Consumers might momentarily benefit, but the leal, results would be seen in industrial stagnation and unemployment. At the same time such a set-back to productive enterprise would of necessity, establish conditions of scarcity, and mak© ultimately for a'further increase in prices. Incidentally a slump, as distinct from a gradual decline in prices, in the United Kingdom would 'be greatly to the detriment of this Dominion and others whioli Jook to that country as their principal market. In all likelihood tho decline in the prices received for export produce would very much more than offset any temporary benefit derived from the ..cheapening of imports. The recent drop in wool prices in itsolf means .a big loss to the Dominion, and a pronounced slump in the United Kingdom, affecting our total export trade, would, of course, entail very much more- serious consequences for this country. In Britain, with its elaborate- commercial and industrial organisation, the outcome of tho present critical situation is dependent upon the play of various factors. Somewhat difficult questions are raised, for instance, in connection with the control of credit and the means thus afforded of enforcing deflation. It is quite plain, however, that the way of safa progress is to be found in a gradual lowering of prices to a level at which they can be stabilised, and that the first condition of smooth progress on these lfncs tS a steady and sustained increnso in useful production. If industrial peace and smooth-working co-opera-tion in industry could be taken for granted, there would be Hi tic 'difficulty in satisfying this condition. Settled peace in the British coal industry in itself would go far to impart impetus to production which would permit and warrant a gradual lowering of prices. On the other hand, if the miner? and other insurgent elements persist in the policy they have pursued during the iast few years "a crisis with its aftermath of depression and unemployment" will arrive as a matter of course. In this country futile industrial strife threatens consequences relatively just as serious as those that are threatened in Great Britain. Apart from its immediate effects, tho limitation of production in the Dominion by stoppages and "go-slow" tactics makes it in the highest degree vulnerable to the weakening of its external markets, and opposes the utmost obstacles to the gradual lowering of prices which here and elsewhere is most to be desired.