WELLINGTON NEWS

Hokitika Guardian, 2 December 1931, Page 7

WELLINGTON NEWS

DEPRESSION OF PRICES

(Special Correspondent)

WELLINGTON, November 30.

It is difficult to follow, much less to account for the vagaries of commodity prices. One or two are rising but most are falling, and the fact of the matter appears to be that we are no nearer price stability than we were three or six months back, and probably the disequilibrium of prices will continue until the principal nations of the earth decide upon some co-opera-tive effort to end the vagaries of the price level. The normal price of gold was 84s> Hid per fine ounce, it is now 113 s and while that continues fluctuations more or less violent must cotitinue.

This matter wa s considered some time ago by the International Chamber of Commerce and the report of the British Committee of that organisation states in Paragraph 12 that the uneven expansion of productive capacity and the uneven distribution of gold stocks have caused the calamitous fall in wholesale prices which has characterised the world depression. This fall in prices has in turn led to a disequilibrium between the costs of primary commodities. The great world exchange between these two classes of goods has been interrupted so that all trading activity has diminished and (unemployment increased. In Great Britain in particular, the direct and indirect effects of the fallen prices has been a serious reduction in the volume of British visible exports; that is of payment of shipping freights, banking, insurance' and other •services and the yield of investment abroad. Coupled with the diminution in the volume of British exports the fact led to a deficit on the British balance of trade, a deficit which can only be remedied under the existing fiscal system by a great expansion of exports.

British exports cannot regain their position in 'international commerce until the general level of British costs has been reduced to a point at which Britain’s productivity and prices can compete with those of other industrial nations. The report acknowledges that tlie reduction of these costs will occupy a- considerable period of time, yet it is impossible for the British to establish her trade balance, and that as speedily as possible. It is essential to correct the disequilibrium of the balance of trade, and no other means are open to Britain that a drastic reduction in her volume of imports, either by total prohibition or by, a general tariff, ill other words if her exports cannot he expanded then to realise the necessary balance of trade her imports must he checked, and the Abnormal Importation’ Customs Act was passed a week ago for this express purpose, So far it is merely tentative hut further measures of restriction are promised. The world depression primarily caused by the United States insisting upon war debt payments and the luxury of the high protective tariff has been forced on Britain, temporarily it may ho, to abandon, the gold standard and abandon free trade, and the effect of this disturbance of the economic situation cannot yet he calculated with any measure of certainty. It is obvious that the adoption of a tariff policy bv Great Britain must impose obstacles to the settlement of international debts owing to her for scriecs rendered by her shipping, her banks, and others such as interest on her foreign investments. The partial closing of the great British markets must cause an expansion of the world depression, at the same time it will force upon foieign nations that something must he accomplished lvv the co-operative effoit of the nations’ The depression is not lifting as some people fondly imagine, hut is being intensified because the great nations are doing nothing to bring relief. The United States Congress assembles in Washington on Monday, December 7th., and there will follow a battle royal on the Hoover Moratorium, the War Debts, the Young Plan and the American tariff, and how the discussions will end no ono can say.