PRICES IN BRITAIN.

Auckland Star, Issue LI, 24 May 1920, Page 4

PRICES IN BRITAIN.

There are signs that a decline in the high retail prices in Britain may be beginning or be imminent, but it would be unwise to draw confident conclusions from them. There are important differences between the position in America and the position in England. One is that English trade has not been affected as American trade has been by exchange movements that have had the effect of cutting down exports and throwing goods on to the local market. Then there is more "cornering" of goods in America than in England, more opportunities for speculating in goods on a large scale, and the American banks are much less conservative and more inclined to take risks in their dealings with traders than are the English banks. The banks in England have been restricting advances, but

the reason for that has not been overstocking by their customers, but a desire to check speculation in unsound new ventures. Of late there has been a great boom in company promoting. This and increased capitalisation based on -abnormally high prices may lead to serious trouble. . For. example, to-day a substantial drop in Egyptian cotton is recorded, and *a- leading cottonspinner compares the boom in cotton capital to the South. Sea Bubble. Since the war scores Of Lancashire mills have changed hands at prices as high as twenty times ' their nominal value. Spindles valued in the books at 10/ suddenly became worth £5 or more. The reported reduction in London prices may not mean mush so far aa general prices

go, though: it is a satisfactory development. It means at least that there is a check to the orgy of extravagance that baa marked the life of the in London for some time past; and as a sign of economy and return to sanity it is welcome. It is curious that this check should come at the beginning of the London season. It is during the summer that extravagance is most marked in London, and the trend of prices during the next few weeks should show whether the movement now Teported will ge permanent and deep. In case the financial world in Britain has to meet a serious strain in the coming months, we may quote a recent opinion of the American Chamber of Commerce in London, given after a'thorough discussion with leaders of British finance, and also based on the meetings of five leading banks, that financially and commercially Britain is fundamentally sound. "Business men and workers are recovering from the effects of the war. Tlie expression 'we are rounding the corner' is heard on all sides." Britain is "neither bankrupt nor anywhere near it," and London remains the monetary centre of Europe. It would be an ironical development if America, which has suffered so much less than Britain as a result of tlie war, experienced a serious financial crisis while Britain escaped one.