AFTER LAUSANNE

Rotorua Morning Post, Volume 2, Issue 387, 23 November 1932, Page 7

AFTER LAUSANNE

BANKING REVIEW MANY COMPLEX PROBLEMS FACING DISTRESSED WORLD. A TURNING POINT. (Published by Arrangement with

The Farmers Umon, Auckiana Province.)

"It is little more than a year since a conscientious director of the-Credit-Anstalt, of Yienna, asked for a revaluation of that bank's assets, and applied the spark 'to a train of consequences which changed the setback in world economic activity of 1930-31 from ,a regular cyclical depression, by way a major world erisis, to a threat to modern civilisation," says the Westminister Bank Review. "Within three or four months, the pound sterling, the most international of all currencies, had been forced off the gold standard, and that standard had ceased to be employed as a currency basis by approximately half the world. Only after twelve months were the Great Powers of Europe suffieiently at one to meet arcund a common table to eonsider accomplished faets as an essential first step towards their removal. "The concrete results of the Lausanne Conference are of supreme and immediate importance, but their moral effect will be even more eonsiderable. For th'e first time, the statesmanship of Europe has proved equal to the task of saving Europe. Democracy and a reasonable nationalistie amour propre have been proved compatible with a wider co-operation for international well-being. The Turning Point. "Much remains to be done, and many obstacles to be removed, but a grateful and restored world may survive to look back on July, 1932, as a turning-point in a crisis whose logical beginning was not 1930 or leven 1919, but August, 1914, 'The statesmen would have been blind indeed if they had failed to read the writing on the wall. There may be excuse for the inability of those unfamiliar with the nature of complex economic phenomena to appreciate the character of long-term forces whose

operation, thougfi mevitable, is generally so gradual as oeeasionally to pass unnoticed even by the 'expert. But the events of the last two years have followed one another with the speed of an avalanche. "Never before has the value of the world's international trade been halved, or the numbers of the world's unemployed workers doubled, in the course of a couple of years. Never before have the budgets ofi so many countries been unbalanced. Never have debtors' defaults been so world-wide. "The earth has continued to yield her increase. The production of wheat, for example, though low in some countries, has recently been maintained well above the average in others. It is man's activity, based on the employment of Nature's resourees, that has been at fault. Poverty Unsurpassed. "It is idle to gloss over the fact that while the populations of great countries, whose current production has been diminished in three years bv

one-third or more, may for the moment maintain something approximately resembling their previous standards of living by generous drafts on their accumulated resourees (particuuarly when, as in Great Britain's case, these are very eonsiderable), it is inevitable that within a relatively short time they must be faced by debasement and poverty on a scale which no Western nation has yet experienced in modern times. "It would be dangerous to judge of the hardships ,a continuance of present conditions must involve, merely by those already endured. Humanity does not^change its habits and conventions — which are the outward sign of the material achievements of past years — without ' a desperate struggle, as those who have tried to alter wage rates, for example, have found. "The reserves which may be drawn upun by a nation willing to live upon its capital are extensive. In proportion, however, as these are depleted in an effort to postpone the evil day; the ruder will be the inevitable awakening, if the forces of depression are not arrested. "Figures afford no encouragement whatever for any suggestion that the rate of decline in economic activity has been checked. In almost every case, the latest figures reveal a substantial worsening of the position compared with the average even of last year. Great Britain, by abandoning the go]d standard, temporarily enhanced her ability to compete for a share of a decreasing quantum. of world trade, and her figures of unemployment, ete., have been more stable, probably, in the last nine months, than those of any other nation. Quite recently, however, it has appeared that the effects of this differential advantage, for the time being at least, have been exhausted. . ' "While British activity may be reduced, in the near future, less rapddly than that of nations like France, which took the impaet of depression later thaii many other States, no stability can attach to the present state of affairs in th'e absence of a decisive change in underlying conditions. Vf'CV".Vv 4 ^ - "V r-.->