THE WORLD OFF BALANCE

Evening Post, Volume CXII, Issue 157, 31 December 1931, Page 11

THE WORLD OFF BALANCE

)UTSTANDING EVENTS

(Written for."The Post.") : "What signifies what. weather, we have in a, country going to ruin like ours? Taxes rising and trade falling. Money flying out of tho kingdom and Jesuits swarming into it."—Mr. Croaker, in "The GoodNatur'd 'Man." . -. How little changed is human nature sinco Goldsmith's day. Into the mouth-of the perfect pessimist, "whose very mirth is an antidote to gaiety," 'is' put a speech (save reference to. tho Jesuits) that might be, indeed is, as descriptive of public feeling to-day as in 1708. Confidence, the jade, will not return for all the coaxing. Why?

It is no exaggeration to describe 1931 as a year of crises; a year of hitherto unimagiiied changes; a year of ruinous depreciation of values—of obliteration ■ of values altogether in many respects— a year of..abysmally low prices-for all commodities (gave gold); a year of colossal losses shared by rich and poor alike; a year of world-wide depression '. in industry and commerce with no historical parallel; a year of greater un- . employment in the aggregate than has ever been experienced in the past. But one thing all these untoward conditions have accomplished —and out of it good may come. It has compelled all thinking men as never before to give attention to social, political, and economic events, in other countries as well as in their own, and made them realise the great fact of the interdependence of nations. This year 1931, however, has not been wholly answerable for the exceedingly complex problems which those in high authority next year—and heaven alone knows how many more years — will be called upon to. solve. Shirk them they dare not on their own peril and on that of.the nations whom they lead and who will look to them for leadership. This year 1931 began with heavy handicaps of problems carried over from the end of 1929 also those which distinguished 1930. In fact, so far as Great Britain itself is concerned tho complexities of the years 1930 and 1981 can in some measure be attributed to the smashing blow to industry, trade, and finance dealt by the general striko in May, 1986, and the prolonged striko of coal' miners, dislocating not only the coal industry, but many othor. basic industries, including transport by sea and land, and diverting millions of money from the United Kingdom to competitive foreign countries. PREMONITORY SHOCKS. Buirtho shock that loosened'the foundation stones in the economic structure of the world originated first in the premonitory tremor of the failure of Hatry and Co. in London, followed almost immediately by the calamitous -Stock. Exchange collapse in New York, the effects of which were comparable in an economic sense to those violent terrestrial disturbances which are sometimes recorded simultaneously in every seismological station in the world. For many months beforo this upheaval millions upon millions of pounds flowed in the reverse direction of tho Gulf Stream, across the Atlantic into ' the New' Tork money market, finding there. remunerative employment, even at high rates. And millions on millions of pounds, or billions on billions of; dollars,.wefe lost when the prolonged ' Orgy of stock exchange speculation came to its swift and dramatic end. No section, of society.' was .-. spared from the effects of that .'awful collapse, for every class was infected with the get-licti-quick organism, ■ : Why did it air end so suddenly as in a moment? American agriculture, mining, sawmilling, steel-making, motorcar manufacturing; ■ all industries were intaefr and the products of farm, niine r forest,... and fisheries were at payable prices, in- fact, for the nine months ended 30th September, 1929, the net profits of 638 varied United States companies, from amusements to motor-ear manufacturers, amounted to nearly 3-£ thousand million dollars, and that was 20 per cent, greater than the net profits of such companies for the corresponding period' of 1928. Eecord crops of cotton, maize, wheat, tobacco were raised on the farms, record outputs left the. fa.etqri.e9, Word exports were sent out. to all the world from the United : States, . And-yot,' in one week, from 23rd October to 30th October, ip 29, credit used in speculation in the form of 80-oalled brokers' loans, fell from 6633 million dollars to 5538 millions, a drop of 1095 millions; enormous presgura was thrust upon the New York ; banks, buttressed by the Federal Beserve Bank of New York. Thp panic - had begun. All great financial centres jn the United States were involved, but for the moment failures of banks and large brokerage houses were averted, ' and no stoppage of great moment, was recorded, on the Stock Exchange. .7 The immediate psychological effects ■'"•(Sf the collapse, however, were mora serious than the financial effects, which, were spfeedily ' adjusted by the "first aid. measures promptly taken. Money became easier; the flow of European furids.to New York was stopped; and • the influence on London was seen in the lowering" of the Bank of England rate to 6 per cent, oii 31st October from tsi per. cent, on 20th September, when it Was raised (as was variously believed at th'tj time) as a result of withdrawal of :.funrls in connection with the Hatry : smash, lack of confidence in tho New York stock market, and an attempt to divert British and Continental funds from that market. Without some knowledge of the crisis of 1929, if only in the barest outline, it is very difficult to apprehend the significance of political and economic •vents in 1930 and 1931.