THE DEPRESSION

Manawatu Standard, Volume LII, Issue 52, 1 February 1932, Page 8

THE DEPRESSION

SLOWLY SHIFTING SCENE. The depression lias dragged on, and has now entered the third year, for it is claimed to have commenced its devastating work in the latter half of 1929, that is, about October of that year, following the Stock Exchange crisis in New York. The consensus of opinion is that the depression will be Slow in moving off, and the movements will be imperceptible to all except those who keep a very close watch on events, and are able to make reasonably Bound deductions _ therefrom. Depression is not the chronic condition of the world; • It is merely a phase, and must yield to the incoming tide of prosperity. But properity . does not happen fortuitously; every nation must strive for it and goodness knows every nation has been doing its utmost, according to its lights, to dispel the depression; and there is evidence that these efforts will be successful in the long run. It is an old saying and a true one, that straws show tne _ direction in which the wind is blowing, and Grn straws of evidence point to a change in the direction of tne economic hurricane. The evidence comes from many different quarters of the globe, and it is worth while recording this evidence. Let us begin with our own Mother Country, for her recovery will assist ours. Eoonomic conditions have obviously improved in the United Kingdom. First, there is the evidence of fewer unemployed. The Ministry of Labour announced the other day that the improvement in the unemployment' position noticeable since September continued until Christmas. During the first three weeks of December the number fell by 112,000,_ of which 77,000 constituted the real improvement, the remainder being due to the tigntening up of the dole. The improvement is seasonable, but is greater than for some years, especially in coal mining, cotton and engineering, which are some of the basic industries of Britain. _ Other evidence is the continued activity of the London Stock Exchange, and the steady appreciation of gilt-edged securities. Sterling has risen in terms of the dollar and the frafic. In New York it touched 3i dollars, while no“ to. very long ago it was under 3.40 dollars. Another piece of information that is rather intriguing is the forecast of a probable reduction in the British income tax. A reduction of at least sixpence in the £ is said to be a certainty, and that means that several millions sterling will remain in the pockets of the people, and will be available for expenditure. The above facts are, very striking, and give much cause for optimism. But tne above is not alt the evidence that is available. On January 15 the Government of India announced that it was in a position to repay a 5J per cent, loan of £15,000,000, without borrowing from London or drawing on her resources. This is excellent news, but more interesting is the fact that £25,000,000 of gold, mostly from secret hoards, has left India. The annual output of new gold is in the vicinity of £80,000,000, so that from secret hoards has come more than 25 per cent, of the amount of new gold to augment the world’s supply, and the cry of a shortage of gold should, in consequence, soon disappear. In Australia the conditions have improved so greatly that there is now talk of reducing the exchange rate on London. The fly in the ointment is the trade figures of the United States. For the past calendar year the exports from the United States totalled 2,424,183,000 dollars, and the imports were 2,090,107,000 dollars, so that there was a favourable trade balance of 334,076,000 dollars, that means at the close of the year the world was indebted to the United States for the balance stated, in addition there are the war debts, but only half the amount due was paid last year because the Hoover moratorium became effective on July 1 last, and no war debt payments were made on December 15. The balance owing to America must be paid, and if that country refuses to lend to other nations then the amount must be paid in bar gold. France’s trade figures for last year show an excess of imports over exports of over £94,000,000. To arrive at international balances the invisible exports and imports must be taken into account, gnd these at best can only be estimated. In addition to the evidence furnished above there is the fact that certain commodities have improved in value. Wool, for instance, is distinctly firmer, with an upward tendency. Cotton is a shade firmer than last month, while rubber, jute, copra and linseed oil are firm. The base metals show improvement, particularly copper and tin. Since January of last year tin has advanced by £22 per ton, but this, of course, is partly due to restriction.

We are now witnessing a slowly shifting scene. The dark clouds are rolling by, and it is time they started doing so. Of course we are not out of the wood yet, and anything may happen to destroy hopes. The problems of reparations, war debts, and tariffs remain for solution.—Mercantile Gazette.