COMMODITY MARKETS AND PRICES.

Manawatu Standard, Volume LX, Issue 246, 14 September 1940, Page 10

COMMODITY MARKETS AND PRICES.

ECONOMIC POTENTIALS. (By “Penloo.”) In war no less than in peace economics play a dominant part arid exercise , powerful influences. It is not sufficient to bo able to call two millions or three millions of inen to the colours, for the fighting men must be supplied with the war essentials to enable them to keep the field. They must be supplied with battle dress and equipment; they must be housed and fed, and bo furnished with weapons and unlimited supplies of ammunition ; in addition reserve stocks of all the items must bo accumulated at many points, and allowances on a liberal scale must be made for losses. All this calls into play the industrial resources of the belligerent, and the financial position must also be sound, for every belligerent needs to import raw materials to maintain the supply of war requirements. The greater the number of men under arms the greater the requirements of supplies. And it stands to reason that the belligerent strong in its economics has the better prospect of victory than the one whose economic position is weak and shaky. The strong country works for a long war, because of the assurance of victory in the long run, while the weak nations seek a quick decision and before they arc economically exhausted. Germany and Italy dread a prolonged war, while Britain is preparing for it. It is worthwhile examining the potentials of Italy. It is gathered from a contemporary that Italy lias adopted a system of economic ■ autarchy, as a result of Axis policy and particularly because pi sanctions. Italy is a country whose national income per head of population is the smallest of all civilised States, and she sulfers from a lack of essential natural products liko iron and coal. Italy lias to import large quantities of other raw materials such as oil, rubber, cotton and many foodstuffs. Financially, Italy is very weak. The increasing expenditure on armament* has resulted in an enormous addition to the fiscal burden and to a steady growth of the national debt. For the last ten years the Italian budget has recorded an annual deficit of between six and ten thousand ini 11 ion lire.'For the financial ycut 1940-41 with the roicnue at 29,000 millions and the expenditure at 35,000 millions the estimated deficit is 6000 million lire. Italy's national debt has reached the great height of 200 milliards of lire. Additional taxes cover only one-fifth of the annual deficit, in spite of severe price control the note circulation is expanding, while the gold reserve of the Bank of Italy, essential to finance the import of raw materials necessary for the conduct of the war, is steadily diminishing, A declining tourist traffic has seriously affected Italy s balance of payments. ITALY’S WEAKNESS.

Of all the great Powers Ituly is llie least highly industrialised. She is so obviously weak economically that it must have been that while in a state of temporary disunity Mussolini declared war on Britain and France. Italy’s strategic positions in the Mediterranean are entirely unfavourable and this must he known to the Italian High Uommiind. Britain is getting ready to strike, and when Italy tools the weight of Britain’s blows sho will collapse like'a house of cards. Germany s economies liavo been in the meiting pot for over ten years, and the good work done by Dr. Scliaeht, the onetime president of tile Reichsbank, lias been of no avail. Germany is trading on paper money, and as sho has very little imports to pay for this paper money serves very well within Geruiuny. Her imports are cm a barter basis, hut even so she can obtain very little. Germany, however, is in a better position than Italy in every way and could probably stand up to another year of wai. Germany after the war will be in a very serious plight, but given good government and the help of Britain mid the United States would again take her place in the industrial world. At The moment tho main objective of the British Empire is to win the war, and there is no doubt that the Empire will win, hut after the war is over and the Nazis hare been struck down we will want German trade, from the Germany better governed, as well as the trade of Italy and of all other countries, for trade is u pretty goon peacemaker, and peace and prosperity arc what we need, Germany and Italy mav have to be helped to take their place in world trade. Germany’s foreign trade has been shattered by the war and tho British blockade. In 1938 German imports from tho British Kmpire as a- whole, bat not including mandated territories, totalled 830.5 million marks in value. This was a decrease of 185 million marks on 193/, hut a substantial increase on 1936. Germany’s exports to the Empire totalled 686 million marks, agaiust 814 million marks in 1937, and 724 million in 1936. These figures include Germany’s trade with the Unned Kingdom. We want all this trade back from a good Germany, and more of it. New Zealand s slime of Germany’s trade has been small as we have been able to export very little to that country because of tariff difficulties; bu 1 other units of the Empire and particularly India have done a large trade with Germany. In the past Germany and Japan also have been large buyers of our wool, and when the, British commandeer ceases, wo will be glad to have these customers attending our sales. There will he many changes after tfie war is over but whatever is done must be by mutual agreement.