WELLINGTON NEWS

Hokitika Guardian, 8 November 1930, Page 3

WELLINGTON NEWS

OPTIMISTIC FORECASTS

(Special Correspondent.)

WELLINGTON, Nov. 6

Tlie Federation of the British Industries is a very important body, and this organisation has recently begun to issue quarterly forecasts of trade. The forecast for the current quarter of the year is optimistic, hut we at this distance from tlie nerve centre ot the industrial and financial world are apt to take an exaggerated view of the forecast. The Federation believes that some of the more persistent causes ot the present world wide depression appear to be undergoing a change lor the better. At most this means that there are indications that the continuous and simultaneous drop in commodity prices is at an end, and this is very probable, for dealing only with a few raw materials it is found that cotton, rubber and copra moved up slightly during the past month, and a few other commodities also improved which seems to oonfoim the forecast that “the forces responsible for the world collapse of prices appear to have almost spent themselves.” Commodity prices have to a large extent touched bottom but “this does not mean that either an immediate recovery is in s ; ght or that there will not be further falls in individual groups of prices from now on.” Me must not assume from the favourable forecast that an immediate recovery is in sight, for it is not, and we will have to endure hard times, and make many unpleasant adjustments before prosperity smiles on the world. Up to the present commodity prices have fallen togather, now they are falling in individual groups, and only some from each group in which it would appear that the process of arrest ng falling prices is now in operation. This will tend gradually to restore confidence. When buyers find that they run very little or no risk at all of prices tailing they will buy in larger quantities and this will set the ball rolling for increasing business.

1 One essential to trade improvement is that the problem surrounding agriculture should 'be solved. Agriculture is the industry which provided the human race with its food, and it is imperative that this industry should rest on sound economic foundations wli ch is not the case at present. While it is extremely important for agriculture that industry should be prosperous, on the other hand it is necessary for industry that agriculture should be flourishing, as the consequent increased purchasing power would reflect and stimulate industrial output. The fundamental problem is the v tal necessity for keeping equilibrium between the xforces producing raw materials and foodstuffs and those engaged in the manufacturing industries. Increased purchasing power in each of these groups means prosperity in national and international trade in general, economic stability and a complete cessation of the violent price fluctuations which characterise present world commerce.

If the various countries of the world would buy more from one another the present adverse condit 011 s would soon disappear. Economists and others attribute the present world depression in part to the shortage of gold. No doubt the maldistribution of the metal is causing a great deal of trouble, and the position is aggravated by the fact that the two countries holding most of the world’s monetary gold, that is the United States and France, have bir'lt tariff walls so high that other countries cannot secure any of the gold because they cannot sell goods to the countries named. While there are ind cations that the fall in commodity values has been partially arrested there have been other indications of a psychological nature that warrant a measure of optimism.

A Democratic victory in the United States is a victory for moderate tariff, and if the American tariff is lowered then the debtor natons will be able to sell their products for dollars, and with the dollars discharge their war debt and other obligations to the United States. Another factor is that the civil war in China is over for the present, and overtures have been made to America on behalf of China for a silver loan. If China settles down to trade and industry it will stimulate the cotton trade of Lancashire, indeed it appears to have already done so, and this will he reflected on other trades and on other countries. Until from the economic and psychological viewpoints the outlook is brighter, but a return to prosperity is a long way and we liave yet to travel some thorny roads before we Teach that goal.