WELLINGTON NEWS

Hokitika Guardian, 17 August 1931, Page 5

WELLINGTON NEWS

THE UNITED STATES.

(Special Correspondent.)

WELLINGTON, August 14

The economic conditions in the United States of America are much more desperate than we were led to believe, and the political machinery of the country is hard at work trying to generate even a small measure of prosperity before the next Presidential election next year. America committed two egregious blunders when it insisted upon the payment of war debts and when it wantonly raised its tariff; By insisting upon the payment of war debts it endangered its domestic trade because the debtors could pay only in goods—some few continued to pay in gold, but the huge hoarding of gold hffis not been of any material help to the United States. It is true that the plethora of gold has enabled the Federal Reserve Banks to cheapen money, but cheap money has not prevented tile Administration from showing a Budget deficit of over £200,000,000. i

Diminished corporation earnings reduced dividends, lessened export trade, slowing down of internal trade and expanding unemployment have been experienced notwithstanding cheap money, fi'om which it is dear that there must he some other basic cause besides the money problem to account for the economic debacle, Insisting upon the payment of the war debts was not unreasonable, hut when to this was added the increase in tariff duties the United States invited the troubles it has since experienced. Other countries immediately replied by counter tariffs, and the United States soon found her export trade seriously endangered. Her factories to-day are operating a mere fraction of their capacitv, for not only has the export trade diminished but the internal trade of tlm country is in a had way. \

To meet the present unemployed situation the authorities are drasically restricting immigration and furthermore are paying undesirables to get out of the country. It is doubtful if this will effect the desired cure. It may result in a few more being employed, but it will have bad effects in other directions. The wages scale is high in the U.S. because the resources of the country are enormous, and the population is large enough to develop those resources. In a country' where the land and its resources are restricted and the population very large, as in China, the standard of living is very low. The United States is just the opposite of China. If America were to be satisfied with the domestic trade and did not hanker after an export trade it might be well, hut to develop an export trade she must buy from as well as sell to other countries.

Her high standard of living increases the cost*"of export products a$d H *R is now being realised that America is losing ground in competition with other countries especially In food products. Mr Geo. Marples, Expert Manager of the Cudahy Meat Packing Company Chicago, in a circular recently issued, gives some interesting indications of the economic conditions in the United States affecting the extension of the export thade in foodstuffs. Mr Marples, who attended the General Congress of the International Chamber of Commerce in Washington, says lie found representatives of the United States Department of Agriculture very pessimistic in reference to the extension of the country’s trade in food products. They said that the United States could no longer hope to compete with Russia in the production of wheat, as Russia had a wheat belt of 200 miles in width and 1000 miles in length, peculiarly adapted to the mass production of wheat. Neither could the United States compete with the Argentine and Uruguay in the production of corn and beef, nor sell butter and cheese in Europe against New Zealand. As far as sheep and wool were concerned Australia would constantly undersell the United States in these products. Even the trade in pork products had been lost, as the Danish competitor could raise hogs cheaper. Mr Marples concludes with the following comment: “In recent months the immigration laws have been tightened, so that there is practically no immigration into the United States at the present time, and if we are to depend upon the slow increase of our own surplus capacity for production it seems to me we can no longer count in this country on the assistance of rapidly increasing population, and that our present plants and equipment will he quite sufficient to take care of our trade for some years to come.