WORLD TRADE INCREASES.

Auckland Star, Volume LXVIII, Issue 1, 2 January 1937, Page 4

WORLD TRADE INCREASES.

BENEFITS OF DEVALUATION. LEAGUE OF NATIOXS SURVEY. World economic conditions and the industrial developments in all affiliated countries are surveyed in the 1935-36 Year Book of the International Labour Office, a branch of the League of Nations at Geneva. Of 1933 the survey says that on the whole it was a year of continued general economic improvement. The increase in world industrial production was about 11 per cent. But the economic picture was not uniform. From the point of view of economic recovery countries might be divided into three groups. In the first group were those with devaluated currencies, such as the United States of America, Japan, the sterling bloc, a number of European countries, and most South American countries. Those countries which had depreciated their currencies not only received thereby a stimulus for their export industries but were also- able to pursue an expansionist monetary policy, which led to a favourable revision of cost —price relationships in domestic industry Tind .to a consequent increase in profits and production. All the countries in this group enjoyed some improvement in their ! general economic situation. The gold bloc countries maintained their currencies at gold parity and followed a deflationist policy. On the whole there was a further deterioration in these countries during 1935, although a slight recovery was experienced in Poland. The third, _ intermediate, group of countries, including Germany and Italy, had obtained a considerable degree of internal economic recovery by credit expansion (of a special sort) and by public investment, but had not officially devalued thencurrencies. Some of these countries, notably Germany, gave some stimulus to their foreign trade by means of export premiums which had the effect of a partial devaluation of the currency. The increase In world production was accompanied by a marked lag in international trade. The tendencies in Europe were divergent. - The increased foreign trade of such countries as Great Britain, the Scandinavian countries, and Czechoslovakia was offset by the reduced trade of the_ gold bloc and exchange control countries. An improvement in European trade as a whole appeared only in the third quarter of the year, and was then largely due to Italy's increased demand for war materials. The main stimulus to ; world trade was contributed by the improved economic situation of the raw material producing countries. The increased demand for and prices for their products enabled them both to increase their imports and to liquidate part of their foreign indebtedness. Further important elements in the recovery _of world trade were the continued expansion of Japanese trade and the improvement in the United States, which showed a-considerable increase in imports anji even, in certain months, an actual import surplus. This was due not only to general economic recovery but to a more liberal tendency in commercial policy which found its expression in the riw bilateral trade treaties. A further restrictive influence on trade was exercised by the Italo- Abyssinian war and by the application of economic sanctions.