WELLINGTON NEWS

Hokitika Guardian, 8 December 1931, Page 3

WELLINGTON NEWS

THE CRISIS INTENSIFIED. (Special Correspondent). WELLINGTON, December 4. With the pound sterling only 14s 6tl and the. exchange- value of the 6 only worth 3 dollars 40 cents and the price of gold up to £5 17s 1 lid per 'fine ounce, it would .seem -Ihat the world crisis, instead of lifting, is'being intensified. The effect of the disturbance mentioned above wi.l be felt in New /.-aland and Australia presently , and indeed it may be said that the effects are being felt already, for our dairy produce arid frozen meat are as low in price as they have ever been, arid th • outlook for wool, which a week or two ago 'looked ' more promising, is back in the doldrums, and is likely to remain there for a little while. These facts are likely to make many people much more, pessimistic ’than they have been, and goodness knows we have -had a surfeit of pessimism. When -the causes for the intensification of th' crisis are examined we buoy ourselves up with hope, for the causes are purely temporary. The fad in, sterling, Recording to a New York message, was attributed to England’s foreign trade

position and' general nervousness ove • -the European situation and the outcome of the Franco-German negotiations.

With respect, to England’s foreign trade weakness, this is due to the rush of foreign exports to Britain in -anticipation of heavy .'customs"duties to be imposed under the Abnormal Importations Customs Act. . This rush o'f foreign exports was to be'expected, but as the Act is r,u force that will stop,, but the importer will net a good profit, these imports' must be paid for, and the imports from October 1 to November 10 were on an average double that of the total imports for the complete - months of October and November. This means that there has been an excessive demand in Britain for foreign exchange to pay for the excessive imports, and of course the -pound sterling has slumped. The' position must right itself, 'for -the volume" of imports will contract heavily, and there will be fess • ’enifiiul for foreign exchange, particularlv dollars and francs, and tlie pound sterling must then rise. r l his wjll take probably two or three months, but the certainty that the position will right ■itself should make us hopeful, not

pessimistic. The outcome of tlie Franco-German ’ negotiations is the greater danger than the drop in sterling. When the SevenPower Conference was field in London in July -it- was decided to recommend the "International Bank for Sett,'em nt to appoint committee to he nominated by the' Governors of the Central Banks to go into the —matter of s financial’position. This GoriimHlee, often referred to as the “Basle Committee," recommend among other things that. ' there' should be lappr.oachment between France and Germany. German Ministers j visited Paris, and French Ministers j visited Berlin, ’when it was decided to , form a joint committee of Frerch- and | ■German Nationals to examine into the matter. But since then M. Laval, the] French Prime Minister, stated that he would not tolerate any interference with the Young Plan of reparations. Here is where the menace lies. Germanv is insolvent, she is quite unable to pay, and while the Hoover,Moratorium has afforded her a little -breathing space, it is only a temporary pall title c. The: position haswto be faced and that-, very soon. -The breakdown •of’.Gyrmany , involves the stability of the ,whole °J Europe. England owes her present ,tion to the fact that she went to the financial assistance of Germany and Austria, and her funds.in those countries are now frozen. .

The role of'England in the economic life of the world is of great significance and ' importance. 'England has contributed leadership and‘. organisation ■to the world’s economic life. ( .In- all previous periods of, economic trouble the world has had the'Benddt'pf the wisdom and the 'courage and the prestige; and the money of London.. England cannot render any assistance* just'/Enow *nd there is no other qountix to take her place, wlij.ch accentuates the trouble.