CAUSE OF TRADE DEPRESSION.

Manawatu Herald, Volume XLIII, Issue 2365, 8 December 1921, Page 4

CAUSE OF TRADE DEPRESSION.

The fundamental cause of the dislocation of industry is the want of confidence existing in the world, between nation and nation, between parties in the State, and between employers and employed, says Engineering. National, and therefore individual, wealth has been destroyed on a prodigious scale, and those who possess what remains are unwilling to invest it in industry because of the uncertainty of the outlook. The Russian peasant refused to grow wheat because he found that under his form of government he could not be sure of reaping where he had sown. The immediate symptom of his want of confidence was the famine and destitution now ravaging the country. During the bo6m period, not very many months apro, the British manufacturer lost innumerable orders by refusing to quote n fixed price or firm delivery, neither of which he felt able to do because he had no confidence in the stability of industrial conditions. The Continental buyer, even to-day, hardly dares to place a large order in this country, because he has iio security that what he would pay 1,000 marks or francs for at the present rate of exchange might not cost him 50 per cent, more M'hen the time for payment comes. International trading has become largely a matter of gambling on the foreign exchange rate, with a spice of uncertainty as to whether payment will be made at all. Banks hesitate to finance such transactions, and arc indeed chary of risking their depositors’ in any kind of trade or manufacture because of want of confidence in international, political or industrial matters. These are the plain facts of the situation, and as-and when general confidence is restored, so the symptoms will simultaneously disappear.