TURN OF THE TIDE.

Auckland Star, Volume LXII, Issue 85, 11 April 1931, Page 4

TURN OF THE TIDE.

SIGNS OF PROMISE. GENERAL OUTLOOK IMPROVED. CONFIDENCE BADLY NEEDED. A more hopeful view regarding the economic situation was expressed by the ' Economist" in a leading article on March 7. "Various economic developments, although individually dubious and intangible, provide in the aggregate some ground for hope that the general outlook has improved. The burst of optimism which is conspicuous in some quarters .should be severely discounted; for it is only natural that watchers for the economic dawn, with eyes long strained on the horizon, should fondly imagine that they see a roseate streak before it has really appeared. Nevertheless, there is sufficient evidence to-day that the recent progressive darkening of the skies has, n-hether temporarily or permanently, ceased. For the first time for over eighteen months the fall in our index number of commodity prices has been checked, while the long-continued increase in the figure of those wholly unemployed has given way to a small decline which, although it may or may not be merely seasonal, is at least a welcome change. On the whole, opinion is gaining ground in responsible quarters that the rapid downward slide has ceased, and that, even though substantial recovery be yet afar off, we have quite possibly touched the bottom of the great depression." For the first time since July, 1929, the "Economist's" index number of commodity prices at the end of February showed an upward movement, and, "though the percentage increase is only one-third of 1 per cent, it is at least satisfactory that the prolonged downward- sweep appears momentarily to have been arrested." As compared with a year ago, the fall in the average level of prices as measured by the index number amounts to 21 per cent: — ■ Average, 1927=100. Feb., Nov., Dec., Jan., Feb., 1930. 1930. 1930. 1931. 5 1931. Cereals and meat 85.4 73.2 70.0 67.4 6C.4 Other foods . 83.0 70.2 71.0 60.5 68.0 Textiles .... 74.7 55.1 51.4 49.2 50.6 ■Minerals .... 90.5 79.0 78.0 -75.3 76.9 Miscellaneous 87.0 77.8 75.2 72.6 72.7 Complete index ~.. 84.2 70.9 68.7 66.3 66.5

A further encouraging feature is that whereas the movement of forfd prices was irregular, resulting on balance in a further appreciable decline, a considerable number of important raw materials moved . upwards, and both the textiles and minerals groups showed a rise of over 2 per cent. Among cereals and meat there was a sharp increase in the price of maize; and imported wheat, flour and Argentine beef were also distinctly dearer._ On the other hand, there were substantial falls in the price "of both English and imported mutton, bacon, rice, and English wheat. The fall of 2.2 per cent in the other food group reflects a further cheapening of cocoa, and, notably, a marked recession in tea prices. In''the textiles group both cotton and wool moved upwards, whereas the trend of other textile materials, particularly hemp, was downwards. Iron and steel and coal prices showed no change; non-ferrous metals were all dearer. In the miscellaneous section a rise in _the price of linseed oil was offset by declines in the case of tallow, rubber, and creosote. "The Real Trouble." The real trouble is that confidence is still lacking, remarks th.e "Economist." At Home the forthcoming Budget is beginning to cast its shadows, and the revelations of the state of the national finances made both in Parliament and before the Unemployment Insurance Commission, have aroused feelings of anxiety in industrial and commercial circles. Stock markets have, however, shown some recovery recently; there are signß of a better understanding in regard to monetary policy and the political sky is less overcast in Europe.

Abroad the trade depression continues to run its course. . In the United States there was the normal seasonal revival in business at the opening of the New Year, but, apart from a quickening of activity in Wall Street, it is doubtful if any substantial progress towards recovery has been made. On the Continent unemployment is increasing in Germany; and Belgium, Holland, and Switzerland are all feeling increasingly the effects of the depression. News from France _ has also become much less cheerful. It is now admitted that there are 350,000 wholly unemployed in the country, and about 1,000,000 partly unemployed; and reports from the chief / industrial centres— especially from Lille and Roubaix have become more despondent.

As regards countries which are usually described as. "primary producers," the "Economist" says much depends upon the harvest outlook. Several South American countries report damage by rain to wheat and linseed crops, though maize has apparently escaped, and an abundant harvest of that cereal is promised. The size of this year's American cotton" crop is a most uncertain factor. The Federal Farm Board is making efforts to reduce acreage, and it is suggested that credit stringency, due to the recent spate of small American bank failures, may also exercise a restrictive influence. If, however, ,cotton prices rise at all substantially, it is to be feared that acreage will at once increase. Generally, the question remains to be answered —how far such reduction in the size of crops as-takes place will be balanced by an equally problematical Improvement in prices; for the purchasing power of the "pripiary producers' depends upon the product of these factors. _ It is only necessarv to state this question to show how difficult it is to answer it, and this is a fundamental reason why the outlook is so uncertain to-day. Better trade depends upon confidence at Home and a restoration of purchasing power abroad, and there is no clear evidence that either condition will be satisfied in the very .early future.