The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, MAY 23, 1932. THE ECONOMIC TROUBLE.

Hokitika Guardian, 23 May 1932, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, MAY 23, 1932. THE ECONOMIC TROUBLE.

In the course of an address given Jast week by Prol'estor A. H. Tocher on some monetary remedies for the depression said that before endeavouring to remedy any economic trouble it is necessary f’nst to study the facts available concerning the economic prob.em to be considered, estimating from the trend of the information examined what has happened and what is likely to happen in the future. Having studied the actual facts and discovered what is wrong with the system in operation the economist will be in a position to endeavour to estimate the causes of trouble. Many people today approach the problem of the slump on the assumption that, because during and after the war inflation caused rising prices, therefore, because prices are now falling, it must be due to deliberate explained by-the banks, The lecturer explained at length the fallacy of such a method of approach, Deflation he described as the contracting of the total amount of money avail-, able, including all forms of credit, TJp to 1930 there had been inflation of the currency, lint since that date bank credit had been reduced. This reduction was not, as was often thought necessarily deliberate; it appeared to be an effect of the depression, rather than a cause. The causes of the depression were' many and must all be considered together, continued the Professor. From about 1924, by which time Europe was once more getting upon its feet, there was a flow of money from America to the Continent for the purpose of reconstruction in European countries. This eastward flow was followed by the great boom of stock exchange speculation in New York, where high rates of interest attracted moneys from Europe. This attraction of European money to the Stock Exchange, together with German reparations, caused currency to flow from Europe to America, with a corresponding shortage of capital in Europe. The concentration of money in New York, and the resulting shortage elsewhere, had the resulting effect of hastening on the present depression. ... Two other important causes which hastened and emphasised the cycle were: (1) the many changes in demand of production all over the world at this time, and (2) the change in methods of buying, viz., the adoption of instalment systems of' payment. Other new and disturbing factors which must be considered with these were the industrialisation of the East, the return of Russia to the world markets, tire rationalisation of industry, and the Introduction of price restriction scheme, which had repeatedly failed, political difficulties, and a general feeling of distrust existing within and between countries. In addition to these, many industries and much land had been over-capitalised since the war, with a corresponding high capital cost of production. To summarise the causes of the depression the lecturer quoted the following passage by Mr H. Lovedav, Chief of the Economic Section of the League of Nations: “The present slump is due largely to wide variations in demand for the world’s products on the one hand, and to unduly high and rigid costs of production on the other.”