"NEW DEAL"

Auckland Star, Volume LXIX, Issue 85, 11 April 1938, Page 9

"NEW DEAL"

ANALOGY WITH N.Z.

BROKER'S OPINION.

U.S. FINANCIAL POSITION.

" FULL TIDE DEPRESSION/'

An analogy between the "new deal' of America and the policy of ihe Labour

Government of Nov Zealand was drawn to-day by Mr. G. M. I-.K-b. a 7>a-scnger on the cruise ship Reliance. Mr. Loeb is a jwrtner of E. F. Hutton and Company, one of the largest. firms on the New York Stock Exchange.

He j*»aid that it was a type of policy that was much more likely to be successful in New Zealand ilian ill America. The Dominion ha- not xct the large business background of the I nitel Stales, which President K>o-e\clt was endeavouring to break down. Experiment*; could be tried in New Zealand, where a very similar policy was being pursued. "The recovery in the U.S.A. from 1932 to 1937 occurred with sound li —<-a 1 policies encouraging, if not actually forcing, the. increase of debt in America, both public and private." said Mr. 1-iocb. ""The normal setback in business following tlic-e pains has thus seemingly turned into a full tide depression, due to Jack of faith by business men in Wasliii, -"ion. The situation, of course, has been .nade even more acute by world-wide unset Uement. "Where Will It Stop?" "Over-buying of goods in the fear of inflation or in the iVar of shortages due to labour troubles ha<s been a major factor. Taxation designed to redistribute wealth rather than to collect revenue forced over-payment of dividends and the paralysis in American capital markets. largely due to new and untried security laws, made replenishment of the financial situations impossible.

'"In general. the low price of American shares in Wall .Street reflects the social clianpes now under way. >o one knows where they will stop.

"Yesterday's recovery due to defeat of the Iloosevelt Government reorganisation plan. together with reports of four billions possible new spending. Despite the opposition 10 Mr. Koosevelt l>y big business he would probably be re-elected to-day." British Investors Working. A tremendous amount of liquid capital was lying idle in America, he said, as financiers feared to invent in new I undertakings. The reluctance of Americans to invest in industrial slocks had nfforded Britain and Holland the opportunity f<-r wholesale purchases of A me-, rican stock. although the operations of such overseas investors, oil the American market hail fnnicwliai declined as the result of los<e? sustained when stock fell recently to an even lower level. "By their purchase of such larcre ! amounts of -.-lock." said Mr. L*>eV>. '-the J British ond Dutch investors have placed i themselves in a position whore they can 'crash" the American market at will by the liquidation of their holdings." ! The one bright spot on American ■ Stock Exchanges was the reaction to * the Far Eastern dispute. In contrast I to the depressing influence it had on 1 Kuropean industry, the conflict between -Japan and China hod boo-ted American • production in certain industries. Although allegedly curtailing exports to the Kast the I'nited Stale- export figures had actually shown a .marked increase during the last few months.