CAUSE OF TRADE DEPRESSION

Taranaki Daily News, 1 December 1921, Page 3

CAUSE OF TRADE DEPRESSION

WANT OF CONFIDENCE. 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 cutlook. 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 or cpnfidence was the famine and destitution now ravaging the country. During the boom period, not very many months ago, the British manufacturer lost innumerable orders by refusing to quote a 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 confftry, because he has no security that what he would pay 1000 marks or francs for at the present rate of exchange might not cost him 50 per cent, more when 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 suqji transactions, and are indeed chary of risking their depositors’ money in any kind of trade or manufacture because of want of confidence in international, political, or idustrial matters. These are the plain facts of the situation, and as and when general confidence is restored, so the symptoms wiH simultaneously disappear.