Wairarapa Times-Age MONDAY, NOVEMBER 7, 1938. RECOVERY IN THE UNITED STATES.

Wairarapa Times-Age, 7 November 1938, Page 4

Wairarapa Times-Age MONDAY, NOVEMBER 7, 1938. RECOVERY IN THE UNITED STATES.

longer ago than the middle of last July, the “World Economic Survey” issued by the League of Nations contained the pessimistic observation that “the world today finds itself menaced with a serious crisis ... because the decline in commercial activity ... in the United States at least, where the disturbance seems to have begun . .. has assumed proportions so great that no longer can it be considered a slight recoil permitting confident hope of automatic recovery.” At the time when this rather dismal forecast was published, a decided movement of economic recovery had already become apparent in the United States. The movement has since continued with good promise and the outlook is brightened correspondingly, not only in the United States, but in a good many other countries which feel directly or indirectly the influence of American economic trends.

It would be doing violence to facts to suggest that there has been an all-round and uniform recovery of trade and industry in the United States. The condition of the American railways, for example, is still deplorable. Twenty per cent of the companies are declared to be bankrupt and many more on the brink of -bankruptcy. ‘‘lt is generally agreed,” one commentator wrote on this subject recently, ‘‘that Federal assistance on. a broad front of reorganisation is an essential, if a vital arm of the national economic activity is not to be destroyed.” In face, too, of attempts to control and regulate agricultural production, difficulties are raised by a 967 million bushel wheat crop, “threatening a surplus in excess of 400 million bushels and a depression of prices to the 1933 levels.”

Political uncertainties have their bearing also on the position and outlook. Leaving aside the merits of various current controversies relating to taxation, “pump-priming” and other matters, it is plain that, under President Roosevelt’s leadership, the relations of the American Government with American business are far from being marked by mutual confidence and smooth-working co-operation.

Qn the American stock market, however, there has been of late a decided revival of confidence. Following on rises in June in the value of securities, the market within six weeks regained half the average number of points it had lost in the previous twelve months and on September 1 last, values of securities stood only 27 per cent below the highest level reached in 1937.

Many people today question the reliability of the stock market as a barometer of business, but any encouragement derived from the current trend of security values in the United States is supported by concrete facts relating to the state of trade and industry during and since the late recession. Unless the current measure of recovery is to be regarded as a mere fluctuation, for example, it is now clear that apprehensions that the late recession was the prelude to something worse than- the 1929 slump and its aftermath were exaggerated. In the months of recession, from January to May this year, there were none of the bank failures witnessed in the United States during the great depression. There were 5,648 commercial failures, but this compared with 15,000 similar failures in the corresponding period of 1932. Unemployment, when recession was at its worst this year, is estimated to have been 20 to 25 per cent less than in 1932-33. The total national income paid out during the January-May, 1938, period is stated to have been only ten per cent below the figure for the corresponding period of the previous year. Quantities of goods in the hands of distributors at the end of the first half of 1938 were estimated to be 10 to 33 per cent lower than a year earlier, and this, coupled with prices lower by six to ten per cent than those of the corresponding period of 1937, is declared to have been “a very stimulative influence.”

Reports of the most recent date from the United States are to tire effect that trade and employment are expanding and that the expansion seems likely to continue. The position has its weaknesses and doubtful features, amongst them an unbalanced Budget and a colossal national debt, and President Roosevelt’s “pump-priming” policy does not inspire by any means universal confidence. The fact stands that, for the time at least, a measure of real recovery is being enjoyed in the United States and that while it lasts this state of affairs is likely to react beneficially on other parts of the world.