WELLINGTON NEWS

Hokitika Guardian, 19 April 1928, Page 4

WELLINGTON NEWS

POST-W A R AME RICA. (Special to 11 Guardian ”.y WELLINGTON, April 16. I lie I ailed States lias claimed a good deal nl attention during the post-war period, cliielly because the war enriched the country and made the Americans the Greatest creditor nation of the world. lint post-war America has been .in economic phenomenon in a gone} many ways, and the Americans who believe that business is very bad unless it is as good as it has ever been, have developed a tendency to believe that they have achieved immunity from the old laws of supply and demand, competition and profits, that have been on the job for so long. Xot many days ago New Vork Stock Exchange was the centre of a prolonged gamble, which was no new thing. Within the last ■ew days the gamblers in the wheat pit or Hoard of Trade, Chicago, have be tome very busy. Since the New York

Stock Exchange is quiet we may assume that the fever of speculation it >ver and the gamblers are counting the gitins ami losses. What has hap pened in Xew York in stock and share:is hound to happen in Chicago in re spent to wheat. What must happen in the two cites is essentially no different from smashes in values that have oc ctirred many times in the past. The \mericiin public mind appears to It convinced that rising prices and busi

ness activity were to continue for ever. The special correspondent of the “ Fin uncial Times ” points out in an inter esting article that what Ims actually happened throughout American indus try is that as production has increased competition has become intensified and profits have shrunk. .Many enter prises have continued at normal activity, hut it is now apparent that pro fits in general si me July. 1927. have no sem'ilauce to those of l!)2;i. The mini her of business enterprises in America which have never been able to malt:

any money is far greater than is gen orally known. With the radically reduced scale o ompany earnings coupled with such factors as the over-production of oi. and tlm chaotic condition of the hituin inous coal industry, dividends must he reduced, 'litis in turn diminished th volume of new capital seeking invest tiiont in the security market. America’s industrial machine has been developed to a point where it far outruns the absorptive capacity of the domestic market. On the other hand the whole mechanism is geared to such a high si ale of wages and other production 0.->Ls that, except in certain favoured line. American manufacturers cannot

compete in world markets against the other industrial countries with lowoi rusts despile the much vaunted highei unit prod nation capacity of the American woikman. This is a phase of high nrotcctive tariff policy which is only beginning In receive attention in the United States.- It is said Lo he accepted as a truism in the I’uited States to-day that of all business enterprises one-third tire making money, one-third are breaking even, and one-third an losing money. America’s ability ft invest vast sums abroad is sometimes pointed out as evidence of its industrial strength. Whether such investments will prove generally profitable depend upon their ability to stimulate markets fur American produce abroad i; British overseas investments have hut - for generations. There is no eviloneo that American foreign invest men's are having this: effect and tin r.lcniational trade balances are such hat A.irerira lanmit even have its inmest r< milled home. All that glitters s not gold, and America proves the oroverh.