WHEN THE TIDE TURNS

Hokitika Guardian, 18 October 1930, Page 6

WHEN THE TIDE TURNS

STAGES OF TRADE CYCLE. f An agreeable contemplation, based on the indisputable fact that the present trade depression will ultimately lift, is undertaken by a writer in tlie Sydney “Morning Herald,” in an endeavour to forecast the order in which various factors in the economic world will receive the first benefits. The writer says:— “The depression, which is worldwide, affected first countries which depend on raw materials for their export trade. Though there were subsidiarycauses, the main cause was the great output of primary products, encouraged by previously profitable prices. That great output grew beyond the purchasing power of the world to absorb, and a glut resulted in low prices, and the impoverishment of the producer. The impovishment of the producer reacted on the secondary industries as the producer curtailed his purchases. In Australia the depression has been intensified by a total inability to borrow abroad, following upon very free borrowing during a decade. Governments had spent in anticipation of loans, and they are being called upon to clear off overdrafts and Treasury bills, which they would have cleared off with longdated issues, and which can now only be liquidated from revenue. “When will the turn come? It depends largely upon traders and manufacturers abroad. At present they are running their businesses on hand-to-mouth lines, doing just sufficient to meet the demands of the day. They are fearful of prices going still lower, shrould the surplus of stocks of raw materials grow. But there will be a day when, some traders and manufacturers will notice some decline in surpluses. They will realise that surpluses are at last going into consumption. Then more enterprise will be shown. Manufacture will take place not only for immediate needs, but for stock to await the time when demand will grow, and at a higher price. Gradually prices will lift. Confidence will beget confidence. Countries whose export is mainly confined to primary products will first experience tlie lifting of the depression. Their growing prosperity. will bring prosperity to countreis of export of finished products There will not be the economy 7 in clothing and in luxuries now being exercised. The demand will be for more manufactures, which will mean further demands for raw materials. It will all beget prosperity.”