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Hokitika Guardian, 18 February 1921, Page 2

Tub bank crashes in the United States are being attributed to the losses incurred by the farmers of the great country. Writing of the position in December an American finoncial journal goes on to say: The fall in prices of farm products during the past month has given a more serious aspect to the I entire business situation. Following the declines in September and October thg cuts again have been very deep, and are of far-reaching influence. AVhen the price recessions occurred in the months following the armistice and a general reaction in business seemed to be imminent farm products were sustained by a heavy foreign demand, and with the buying power of the farm population sulitained, a good general trade over the country was maintained, and the industries that had been disturbed were brought hack into line. The expectations of continued prosperity during the coming year have been based upon the assumption that with Russian products still out of the competition the demands from western Europe would continue to sustain prices for farm products. This expectation has been disappointed. The drop in farm products lets down practically one half of the industrial organisation, and renders it unable to continue purchases of the other half on the same scale, without a general readjustment of the basis on which the exchanges arc made. The farmer has suffered not only a great direct loss of purchasing power, hut a shock which will affect his mental attitude towards expenditures for some time. He has debts to pay, more debts than at any previous time, judging by the volume of bank loans, and it will take a great many more products to pay them than it would have taken three months ago. It is nqt to be expected that be will be tin* free spender in the near future that he has been during the last year. This prediction unfortunately has come, hut too late. The cable news on Wednesday night indicated the desperate situation in America, where thirty hanks have closed involving money running into many millions of dollars. The lietter market the farmers waited for has not come, and the plethora of reserved stocks will he dumped on the market for speedy realisation and a new level of prices will he created. Supply and demand will again come into its own supplanting the artificial methods by which it was attempted to rule the markets of the world with a rod of iron.