WELLINGTON NEWS

Hokitika Guardian, 27 February 1931, Page 7

WELLINGTON NEWS

ASIA AND THE SLUMP. (Special Correspondent.) WELLINGTON, Feb. 24 Mr Winston Churchill, ex-Chancellor of the Exchequer, in a speech in the House oj' Commons, attributed the present depression to Asia, naming India, China and Russia :>« the principals. There is no doubt that unrest, civil wans, anarchy and tyranny do prevail in the countries named, an! the people are the poorer, their spending power being enormously decreased. At the same time it cannot be overlooked that the produce of the East has been depressed in common with the product of other countries. Rubber, copra, jute, tea, rice and cotton have all slumped. Copra used to be regarded an the “consols” of the East, and was selling at good prices. It is a question whether the unrest is not attributable to the fall in the price of commodities produced in the East. Russia severed herself from the comity of nations years ago, and Russia is due for another revolution to bring her back to the fold. China's troubles have been greatly due to the machinations of Russia, and Indian unrest and Australian neitation are also probably due to Moscow money. Not so very long ago it was alleged that that the Red International was represent! in Australian Governments. China is settling down "irl will soon recover for the country Ims great re sources. But Asia is not i'oV cause of the slump. In the opinion of some we are passing through a trade cycle, the inevitable result of past mistakes, A trade cycle, says an authority, hecia] crisis. Tilings have settled down ; gins a few years after some great finanprices have become stabilised ; business is good and new enternr’ses arc sucsuccessful. Assets are increasing in value, and people invest freely in real estate and other ventures. The prospect of large gains encourages the granting of credit. Money becomes plentiful and living extravagant. 1 inally prices soar to unreasonable heights. At this stage far-sighted individuals convinced that things cannot last, set about to realise. There is a sag in the marekt. Everybody gets nervous and there is a general rush to convert investments into cash. The majority however, are too late, and the crash follows. There comes a period more or less prolonged of stagnation, with a great shortage of money and a very low price level. Gradually things get stabilised nml a new cycle in. The period off high prices and abundance of money is called the period of inflation, that of low prices and scarcity of money the period of deflation. Nothing in general and nobody in particular has been the cause of either inflation or deflation. They are due in the main to the psychology or the human mind. If we look hack on the events of three or four years we can put the finger on inflation. In Britain company flotation was very brisk in 1927 and 1928, and eventually the financial world was staggered by the Hatry crash, In the United States til eve were extensive speculations in real estate ending with the smash in Florida, In New York the Stock market speculation was nation-wide, call mon» ~y went up to 12 per cent and mure but| the end, and it was a disastrous end, came in the summer of 1929. There was a speculation sensation in i Canada and in most European countries similar instances occurred. In Australia and New Zealand investment in shares was pretty generai and prices were high. Real estate expecinlly in the city sold at high prices and men dependent on menguo and uncertain salaries and wages entered into obligations that could not lie carried out except times remained good, Values of all kinds including services were overrated, and that such a state of affairs could not last must have been obvious to anyone who stopped to think, hut anyone venturing a pessimistic opinion at such a time would have been hounded down. Such is the psychology of the human mind. Now there are many people in a state of gloom; they are really pessimistic, In a boom period we need the pessimistic to exercise a sobering influence, hut in a slump period we want optimists, for optimism will help in recovery. The optimist of to-day if he looks around will find something to ho optimistic about and that something is wool, The wool market is firm with a hardening tendency,