The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun. WEDNESDAY, JUNE 15, 1932. IMPORTANCE OF SOUTH AMERICA.

Auckland Star, Volume LXIII, Issue 140, 15 June 1932, Page 6

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun.

WEDNESDAY, JUNE 15, 1932. IMPORTANCE OF SOUTH AMERICA.

For the cause that lacks assistance, For the wrong that needs resistance, For the future in the distance, And the good that tee can do.

An eminent British economist said recently that if world prices did not rise, all the debtor nations would become bankrupt, and subsequent developments have not belied his prediction. The effect of the depression on youth American States, as seen in the inability of Brazil to pay interest and the Socialist coup in Chile, are particularly interesting because in none of these countries has public finance been, directly affected by the war. Though they stood out of the war, they have not escaped the economic blizzard. Anxiety in Britain as to the future of funds invested in Chile has been increased by the fear of confiscation, but a message to-day says that nothing detrimental to any foreign interests is "in immediate prospect." It remains to be seen how much this assurance is worth to the British investors who have supplied so many millions to Chile.

There is a natural tendency to scrutinise closely the position in other South American countries, for, with dwindling national incomes, all are finding it more difficult to live and pay their debts, and Britain must suffer heavily through any default. Britain's interest in these countries is enormous. The Argentine is an old commercial ally, and more than £600,000,000 of British capital has been invested there. A prosperous Argentine ( therefore means an increase in the dividends received by British shareholders, and to that extent, therefore, it is in Britain's interest to help to increase Argentine trade. As a recent writer from Buenos Ayres said: "The Argentine has the strongest possible reasons for strenuously supporting and assisting British enterprise, especially at a time like the present, when our oldest friend among the nations is struggling against the most serious crisis in her commercial history." There has been a growing feeling in the Argentine that something is radically wrong with the British trade connection. An improvement from the point of view of the British manufacturer has been brought about by the exhibition of last year and by special missions, but the producer in the Argentine reflects that such a change should be accompanied by increased purchases of his produce. Among the other republics, the most important is Brazil, in which the invested foreign capital is preponderantly British. A recent estimate showed that Britain's stake in tho country amounted to £300,000,000, or ■considerably more»than half the total of foreign investments. Brazil's trade has been badly hit, and towards the end of the year the Government was obliged to decree the suspension of a large proportion of the debt service. To check the downward movement, proposals for reform in tho economic system were made by Sir Otto Nicmeycr, and reports indicate that Brazil should derive considerable benefit by taking this advice.

As debtor nations the South American Republics have found their debt burdens increasing with the fall in world prices, and much of these burdens will, in cases of default, be passed on to Britain, which has finally to bear them. Here we have another proof of the interlocking of international finance in general, and in particular an example of the world-wide effect of the depression on British interests.