CURE FOR SLUMP

Rotorua Morning Post, Volume 1, Issue 97, 15 December 1931, Page 7

CURE FOR SLUMP

CONFIDENCE WILL SOLVE DIFFICULTIES OF WORLD PROFESSOR'S VIEWS "There is plenty of money in the world, just as much as there was in the good years of 1928-29, and the world has adequate means for the production of goods. Ali that is wanted is confidence on the part of the world's people." said Proi'essor A. H. Tocker, of the Chair of Econo- ; mics at Canterbury College. He referred to the recent sensational fall in the value of the sterling, and after stating that Europe was in an "economic mess," declared that the trouble was to a considerable extent psychological. When the great body of consumers were afraid to buy trade suffered, more unomployment was caused, and the downward drift made it apparently all the more necessary for individuals to conserve their finances. One cor.ld not tell to what depths of trade depression such a policy would hring the world. The want of confidence would have almost limitless effects. "Confidence Dreeds Confidence" On the other hand, the steady generation of confidence would have just as uplifting an effect. Confidence would breed confidence, and the ultimate result would be the lifting of the world from its present state to one of brisk trade and prosperity. Professor Tocker stated that the recent dramatic fall in sterling, together with Sir George Paish's outspoken statement regarding the seriousness of affairs in Europe, appeared somewhat alarming. It was stated, however, that the volume of trade on the exchanges was by no means large, and the sudden fall in exchange was .probably only one of

the erratic movements that were to be expected when heavy selling took place on an exchange unsupported by gold movements or by bank action. j British papers up to 31st October, which had just come to hand, continued the professor, were much more reassuring on the British position. The "Manchester Guardian" commercial supplement of 29th October had a note headed "The Turning Tide," which spoke of newspapers filled with the reports of increasing confidence, brisk turnover, and brighter prospects in the cotton, rayon, silk, woollen and jute industries. That sudden revival, it was stated, was not due entirely to the fallen exchange. The cause was partly psychological. Just as nothing succeeded like success, so the spurt would grow of itself once the ball was set rolling. The question was whether the sudden spurt was a miniature boom that would fizzle out, or whether it was the beginning of a real trade revival. Appreciable Recovery The "London Economist" had "been publishing a weekly index number of prices of staple commodities entering into world trade since the gold standard was suspended. During the first three weeks British trade was about 8 per cent., but world prices fell by nearly 5 per cent. By the end of October world prices had recovered, and were higher than in midSeptember, while British prices for those commodities had risen nearly 15 per cent. Those reports also supported the view that there had been an appreciable measure of recovery in Great Britain. In other countries, however, and particularly in those which remained on the gold standard, said Professor Tocker, the strain appeared to have been increased rather than lessened. The scramble for gold still continued, and many countries had been converting balances held overseas into gold for import, or taking other means of repatriating their funds. America's Heavy Losses The "Economist" reported that up to the end of October the United States of America had lost about j £150,000,000 worth of gold in that way. The United States was also faced with an enormous Budget deficit, which might approximate £400,000,000 for the present year, and it was stated that so far no steps had been taken to meet that deficit. The United States deficit last year was of about £50,000,000. In both America and Europe note issues had \ been increasing, despite stationary or I falling prices and low trade activity. J "It appears that in many coun- , tries," added the professor, "confi1 dence in banks is impaired, and that ! people are hoarding money. . It is j probable that this low level of con1 fidence is the key to the whole sitJ uation. The cause is not deflation, : as many persons have suspected, for j ' there is little evidence of deflation i ] anywhere. The level of confidence ] anpears to be extraordinarily low in j every country, and there seems to be | no likelihood of recovery until a ' greater measure of confidence is generated."