The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, SEPTEMBER 1, 1930. PERPLEXING PROBLEMS.

Hokitika Guardian, 1 September 1930, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, SEPTEMBER 1, 1930. PERPLEXING PROBLEMS.

Conditions that affect the world of finance are still unfffvourable. Broadly speaking, these conditions, says a London commercial papery are represented by world-wide ’ depression in trade and its corollary of low commodity prices. There is <also political unrest in various countries abroad, while at Home, if some authorities are right, there : is a prospect.of ill 1 other General Election. Russia and China are not pulling their weight in the economy of nations, while India is disturbed by native political agitation; alul there is fl’ouble in Egypt, Ltirgeiy tile' unfavourable conditions iii Great Britain are a reflection of the diminished phase of prosperty now beingu experiencod by the world at large, - America is feeling this very considerably, and the heavy fall in prices of commodities severely affects the great producing countries, such as those of LatinAmerica and Australia. At Home there is unemployment on an almost unparalleled scale, and the country is burdened with-heavy'taxation. With ■ill this a somewhat bewildering conflict of opinion is evident as to what measures should be taken to improve our trade. There is also a lack of unanimity regarding the cause of low

commodity prices. The more general acceptation is that it is due to overproduction, but one authority has declared that this is wrong, because there is no limit to the power of consumption of mankind. The lessened ability te consume on a normal scale, however, despite the educed cost of many things can scarcely be doubted. Fiscal changes are suggested as a panacea for the country’s troubles. Many people consider that our manufacturers cannot meet foreign competition while the burden of taxation is so heavy and wages are so high. Apparently, there is no prospect of an amelioration of the former condition while the Home Government goes on increasing the cost to the country of social services. The contention that wages are too high has been denied on the ground that remuneration to workers should be maintained in order to ensure a high degree of consumption among the people. This would answer, possibly, in regard to the internal trade of the country, though even then there is no guarantee that big wages would ,be largely spent on necessities as distinct from luxuries. There is also the important point that a small wage may be too much if it is paid for inefficient work, or for work that is not of a productive character or does not contribute to the maintenance of our'exports. Altogether the outlook . with which the financial world is confronted is not satisfactory. The fall in prices has adversely affected the economic well-being of various countries in which a large amount of British capital is invested, and an inevitable result is that the stocks or shares which this capital represents are serouslv depreciated in value. The effects of the diminution in world prosperity are thus cumulative. Tt is well known that since 1914 the United States of America has become the creditor of

the world. Its wealth has increased enormously, and the country is a great factor in international financial and commercial affairs. The great break in prices of Stock Exchange securities in New York last autumn was the signal for a. most unmistakable check to the abounding prosperity of the country. For a time the break was regarded as a merely temporary phase which would he followed by a return to normal conditions and the resumption ot expansion. It was hoped that the

anticipation of tax remission by the Government, the maintenance of dividends by trading corporations, and a substantial reduction in interest rates would restore prosperity. The factors at work wore too powerful, and more recently the real situation has been made clearer. The power or, to some extent it may be, the inclination, of America to Imy from other countries is an important cause of the smaller movement in world trade. This is brought out by an analysis in the. current monthly review of the National C/ifcy Bank of New York. This analysis shows that for the first four months of this year the total diminution in the imports was equal to about 22 per cent. The decline in America’s exports to the same places in the same period was- similar, having amounted to about 21 pei' cent. Expressed in sterling, the total trade of America with the rest of the world showed a decline of nearly £l-13,030.600, converting the dollar at par of exchange, and it may be added that for the first six months of tin's year, according to the Department of Commerce, the decrease is approximately £218,600000, the exports having declined £108,000,000 and the imports £110,060,000. In considerilift those figures the great decline ill values inilst rtilt he Overlooked; for owing to this the actual movement Of cOnfiinerce was not nearly as great as might be gathered from the statistics. Tn commenting* upon the returns, a writer in the bank review mentioned ftbove feiiys that when depression struck the United States aiid impaired tlie purchasing power of what is do* scribed as the greatest- single market in the world, the effects could'not fail to spread all over the world wherever there nre people producing goods for America’s consumption. The diminished imports of the United States reacted unfavourably upon those countries; ■uid contributed to the fall in prices, thus producing a condition of distress more acute than that experienced in the- United States, where diversification of industrv has tended to modify' the extreme .swings of business.