A Forecast of Prosperity

Sun (Auckland), Volume 1, Issue 96, 14 July 1927, Page 1

A Forecast of Prosperity

DEPRESSION ENDING COURSES OF TRADE CYCLES A N improvement in the general business conditions in New Zealand is a probability for the immediate future. This was the opinion which Professor H. Belshaw, who holds the Chair of Economics at Auckland University College, expressed in an address to the

Manukau Chamber of Commerce last evening. H e commented that the spending power in the Dominion was rising and that the import surplus had been almost worked off. The prosperity of New Zealand was bound to external trade. The depressions and booms were transmitted into this country

from outside although a minor factor might be found in our own production.

CAUSES OF DEPRESSION The causes of depression were of a two-fold nature —temporary and longrun causes. The failure of dairy control and the larger wages were of the former class. Professor Belshaw had no sympathy with those who attributed all our ills to the Arbitration Court. The lag in wages has occurred in countries where there is no court, so it was unfair to blame the Arbitration system for it. People should not be stampeded by the present depression into rashly interfering with the court. More permanent factors in trade depression were the delayed fall in land values, inadequate capital for farmers, and the burden of debt under which the Dominion was labouring. The most important means of attaining stabilisation was by tightening credit while the trade booms were on and easing credit again while in a depression. THE BANKS’ PART Stable world prices would automatically react on New Zealand, but the control of those prices was beyond us. Banks should act to prevent overimportation and to avoid excessive fluctuations in purchasing power by an elastic system of discount and overdraft. In regard to the late increase in the overdraft rate, Professor Belshaw said that it had come too late and it was now a factor retarding recovery. The speaker also advocated the application of surpluses to the extinction of debts even at a price of a temporary disadvantage to taxpayers. New Zealand suffered by the deflation in England in the effort to bring about an exchange parity with New York. British industry was steadily improving and world prices gradually declining.