ECONOMIC CONDITIONS

Dominion, Volume 14, Issue 227, 20 June 1921, Page 8

ECONOMIC CONDITIONS

MR. HAROLD BEAUCHAMP’S SURVEY

THE NATIONS PROSTRATED "The whole' world is, as it were, in the melting-pot, and it is difficult to say what the outcome will 'be.’’ said the chairman of tho Bank of New Zealand (Mr. Harold .Beauchamp) on Friday. "Political and industrial unrest is disturbing every nation, and there a.ro wars and rumours of wars. This is the aftermath of the great conflict from which the world has so lately emerged. While it was in progress, we were frequently warned that it would bo followed by a commercial war between the nations, but, instead of this, we see everywhere industrial strife and political conflicts prostrating the nations and impoverishing the peoples. "The world to-day is economically ill. Never in its history has there been such ‘ a Babel of economic discussion as we have had during the past twelve or eighteen months, and yet mine can say with any degree of truth that Capital and Labour have been drawn closer together. The reverse is the case, and tho breach has been widened by the deliberate efforts of self-seeking agitators. An ex-American Assistant-Secretary of State recently said: 'The world of chaos which the Groat AVar has left behind it can never become ordered unless the process of ordering is based on the inexorable rule of political economy rather Ahan upon partisan politics. Economically the world is too ill to be experimented! upon by quack or unqualified physicians.’

"Tho day lias passed by when any citizen can afford to ignore the principles of political economy, for the daily life of everyone is inextricably bound up with certain well-ascertained economic laws from which there is no escape. "’Labour has not realised its responsibility or shown its appreciation of the serious position in which the nations of the world are at the moment placed. Extremists appear now to exercise an undue influence in the Labour movement the world over, and strikes, direct action, 'go-slow,' and similar tactics have brought the nations to the verge of collapse. The Socialistic quacks who rule 'many of the Labour unions to-day care not for tho future welfare of the workmen or the general stability and prosperity' of the country.” Alter referring to the British coal strike, which' would leave the nation “very much poorer because of this wanton and criminal attack on the people by irrosponsible agitators.” Mr. Beauchamp said that notwithstanding the turmoil of the past two years, Britain showed very great powers of recuperation, and trado was gradually getting bock to normal. The great expansion in Britain export trade in 1920, as compared with 1919, was no doubt due to the accumulation, of orders which the manufacturers wer/a able to execute more rapidly than hird been thought possible. In 1919, and in the first half of 1920, prices of commodities rose under the pressure of urgent demands from a world-wide clientele, far more rapidly than the increase in purchasing power, with the inevitable result that a reaction set m' and trade declined as prices were forced down to meet the economic conditions of the importing countries. Britain must now anticipate a heavy decline in both value and volume of exports during the current year, and the figures for the first tour months clearly demonstrate this. The British possessions mid foreign countries, particularly the latter had been able to obtain very little British capital, but the prospects were better for the current year. low ra-e of interest however, could not be expected to rule, for Britain liail not, yet licen able to accumulate mucTi of a surplus for outside investments. "The conditions in Now Zealand reflect in some degree the adverse factors ruling in Britain, and disclose features peculiar to the country,” said Mr. Beanchamp. “The scarcity of. merchandise in New Zealand, due to ‘‘-he transport and other difficulties arising out of the war, induced importers to send abroad orders much' in excess of requirements These orders, instead of being executed over a considerable period of time, as was anticipated, were dumped on the country in a few short months, with the result that the imports into the Dominion were on a tremendous scale. A the same time, owing to the Imperial Government discontinuing the purchase of wool and meat, and the slump in the market value of these goods, there was a contraction in the exports. shipping difficulties also rendered the position serious by hampering the export trade "The imports exceeded tho exports in the twelve months ended March 31 lasi bv the substantial sum of £19,263.940. It must be borne in mind tint, besides paving for the imports, we have io pay interest on public and municipal indebtedness to Britain out of our exports, also large sums for freight, insurance, nnd other charges. It will, therefore, be seen that we were very much to leeward in the year under review. It must also be remembered that the total represented bv the exports was not all available to provide funds for the inward trade, for it includes a good deal of produce purchased and previously paid for by the Imperial Government. “The new conditions that have arisen have brought about a scarcity of loanable credit, with the result that interest rates have materially hardened. Un first-class security money is not very readily obtainable on mortgage at 7 per cent., and Government bonds have recently been bought in the open market at prices which will yield the investor from six to six and three-quarters per cent. . As a consequence of tins (he rates charged on bank advances ana "Tiso allowed on fixed deposits have been increased. "How long the monetary stringency nnd industrial depression will last de pends upon a variety of circumstances, but mainly upon the rapidity with which tho economic unity of the world is restored. All the great wars of tho past immensely stimulated the economic development of the world, and invariably gave a powerful impulse to the greater use of labour-saving machinery. Probably we are on the teve of some such economic developments. After all, wo must rely upon hard work and thrift and the moderation of parly politicians in arranging the national affairs. There will be a continued demand for New- Zealand’s products-our wool, moat, butter, cheese, hemp, and tallow are. all wanted; and the purchasers are willing to pay up to the limit of their purchasing power; that limit just now is a low one, but it will expand, and so will the demand for the products. "Our trouble just now is in adjusting the cost of production to meet the cbangod. conditions. As soon <ls pi icos of commodities show- some signs of stabilisation, there will be manifest confidence in the situation, and on that confidence a new and enduring structure of tradit? anil commerce will be built. 'Hie present is a time for the avoidance ot extremes—extreme optimism and extrema pessimism. It is a time when conditions should be looked at squarely and dealt with courageously. New Zealand is not feeling the pinch as seriously as some other countries, and if all_ sections co-oportite for rhe common welfare, tho recovery will be speedier.”