WELLINGTON NEWS

Hokitika Guardian, 27 August 1930, Page 2

WELLINGTON NEWS

MARKET FORECASTS.

i (Special Correspondent.)

WELLINGTON, August 23. Every business man in trade,whether wholesaler or retailer, or merchant, must make some forecast;, of the probable tr%id of Trade, at least'to his own satisfaction, ibefpredie would make any business venture.;.,' Unfortunately with many people the wish. is father to the thought ah 4 think because they wisli'the market to improve tnat therefore,fit will do so. It is obvious that (forecasting on those lines is ruinous. The dairy export season has just begun for New Zealand, that is to .say the cows are mow coming into profit, and presently new season’s butter amt cheese will bereaving our shores to provide that'national income that we badly need.■ Of'course there are forecasts being’ made in the dairy trade, and one firm has; stated its opinion that butter this season will stabilise at about 140 s. per 'cwt., but no indication is given howMe firm arrives at this conclusion, at;all events it. seems |rftg= ic irony ItKftt/sihee made the. Jifice df buttet oil The London marlteT ; Had; droped ftotn 18$« to 132 s peiycwL;< and, the iinarKet is reported wieitk,which menn£ t^at*■ jthe price may pici ; lower, although everyone will fervently hope thafcl.palamity will not follow, f•; ;We ;ihust ‘ noi fwgfp the fact .very ;5-loi>g New Zealandreceded .to'T2os, it: may do s&|dgaip.-‘ It is

ely futile any forecast of the commoditylinarketsy- for the factors that hav'Cyheen responsible for the drop in yafues stilj. continue, and while they continue it is Impossible that there can be 'si recovery in commodity values. These two factors—and they are the main factors—are the gold problem and the tariff problem. The gold problem is the more important ot the two. v The International Edconimc Conference '.which was- held in' Genoa recommended . countries that had Abandoned ,the gold standard .to revert t|| it,l aild. the general adoption of the gold standard has been carried out, a,pd,.practically the whole, of; the civilised world is on the gold standard, thus, :;a&U aii authority observes “the purchasing power of the currencies o' the gold standard world is determined by what gold will buy.” Since quart?* gold has appreciated and the level •:of wholesale commodity prices lias declined, which ' gives rise to the contention that there is a shortage of 'the yellow metal,* while othefk ascribe the fall to 1 over-production, and there appears to he a certain anjount of justification for both Cfffiteiitiaivs,. In a: recently pulF* lishediypldfpb. ehiptlpd ‘‘Memorandum on Production Trade” the League of Nation? gives figures’ which show that in thp,period 1923-27 world production increased by 3 per cent per annum compqund, while, world population increasddyduring Those periods at the rate dfyabpTit 1 per cent, per annum. There ivas,thus an apparent excess of production of 2: per cent, per annum to maintain that increased population at a stationary standard, of life, but an increriie? of'production extending .ner the whole range of commodities cannot lead to over-production, for the producers if the individual commodities have more to exchange for other commodities, and their trouble is that they cannot exchange on an equitable basis. It is clear that an increase of production involving an increased turnover of goods and. ,services calls lor a corresponding increase.in the amount of money and credit to affect that turnover and maintain the price level. - A structure of currency and credit is built up on tb^monentary; gold reserves and at jthe/'preSent lime /there is a maldistribution of monetary gold. In the Unite|l States' and Era nee therp is more goldTtliap is > required and the surplus ijs^,sterilised and serves no monetary. Impose ;■ that is to say that the the gb)s standard. world ,is deprived of the credit that this sterilised gold would provide, and that explains the very great fall of the general level of commodity prices. How is this to be- remedied Both the United States. seem capable of absorbing more of 3the world’s monetary gold, and if they do so there must follow a further fall in commodity prices. Even if this gold problem is ■solved there still remains the tariff barriers to check the flow of trade, but tariffs can be lowered by agreement