WELLINGTON NEWS

Hokitika Guardian, 29 September 1930, Page 2

WELLINGTON NEWS

"WALL STREET'AGAIN. >. ‘‘!<f ; ' i " > ' (Special Correspondent). , 'WELLINGTON;. September 26.- .. There has been-another serious. Half in security values on ■ the "New York Stock Exchange and its 'reprecu.s.sionv will be widely; felt as t all previous setbacks' in-that centre have been felt. America is' the largest’ holder’ ©f monetary gold in the world, ancl.the suppljjit hplds is far in excess;of the .nation’s currency and credit demands. 1 Shortterm money was and is exceedingly cheap in New York, for the rediscount rnj». ofvtlie .Federal Reserve Rank is 2s;'per cent., and call nichey bah teen ruling at the same rate., .What thoi) is responsible for such.heavy decline* in r share values’practically .in the course of .a single day ? According to the cable message General Motors lost 40 million dollars (£9,600,000) in market yalue§, American Telephone 36 million (£ll,jpOipboj ahcj ’United States .-Steel 84 ' millions (£6,800,000.). It camiot be from lack ,of credit that (hese recessions have occurred,' so we must look in t}ie Other .direction for the cause. No doubt chegp • money' stimulated investment apd speculation, and some set-back waa. inevitable, but not the heavy fall recorded. , Tho explanation probably lies in the continued decline; in wheat and cotton prices, and to the effects of the diiftitrous drought experij*need ?n hiiny of the States, Purchasing power of the agricultural section of tlje opipr infinity has been greatly impaired, savr ings must be less and surplus available for investment growing less. AH markets in TJ.S.A. have been depressed; W poration earnings hafe contracted, .dividends reduced and wages cpt, and this is, the state of affairs in . the ricjipsf country in .tbp world.' This cannqi by very encouraging to the rest of . the world. When there was the big s.lfijhp in New York last year the effects .wepe quickly felt everywhere and holders >of shares in Australia and New /.ealand know how terribly they were afid from which they have not yet recovered. This fresh crash inj New York.if it does not add to the .world’s trophies will prolong the-period of recovery. The Western and Eastern nation#! are bcith suffering, and the life with many nations is now lQbtyr than before the war. This is type oif India, China and, Russia, embracing 900,000,000 people. Jute, rubber, copyft, coffee, sugar, too. ,tin, silver and cotjqp mostly -tropical and sub-tropical products, are very much depressed, in fact the present is an agricultural rather than a financial crisis., The standal of life depends upon purchasing, power, and purchasing power depends upon the sales of our service, or the ability and capacity to earn wages and kalftries. Millions of people are unemployed, and their standard of life depends greatly on , charity and they hatfe caused a lowering of the average standard of life, It is of (i6iir.se a debatable matter whether .( the agricultural crisis now being exper Weed is due to over production or under consumption, Both factors are probably responsible, but over production is due directly to the war in respects(pf some commodities. Sugar, for instance, shows an increase from an average 19,363,00 Q. (tons, in the period 1909-14 to 29,9ft|0b0 tons in 1929-30. During the war; the production of beet sugar in Eurbpe . censed and, the world was dependent, ,upon cane sugar the production naturally, increased , under the ;stfmulus of high prices. But beet sugar is again being produced and from an output of 8,823,650 tons it is now tons., The canesugar industry is suffering as most of the producers of this sugar have surpluses to export. Cuba, which ie the principal producer .of; cane sugar, is said to be now in tWlsixth year of progressive depression. In the West Indies sugar production is a very old industry and in Jamncia it has been found necessary to subsidise the industry to keep it alive. Similar harassing conditions could be detailed with respect to other tropical and sub-tropical commodities. The use of silver as a monetary metal has ceased and the output of the white ihetal has increased enormously depreciating itsi value and ruining East ern people. the purchasing power in the East has shrunk, this has been felt by Larrchashire as the cotton mills there cannot sell their products, this has in turn caused the drop in cotton. But the domaward movement of commodities it has been general it has nois)een uniform. There is apparent oVer production in several directions but if trade betweeen nations was allowed some freedom for the next twelve months consumption would soon clear the surplus.