Bay of Plenty Times. THURSDAY, AUGUST 11th., 1932. GENERATING OPTIMISM.

Bay of Plenty Times, Volume LX, Issue 10885, 11 August 1932, Page 2

Bay of Plenty Times. THURSDAY, AUGUST 11th., 1932. GENERATING OPTIMISM.

A characteristic of the people of j the United States is that they jump i to extremes. At one time they are i extremely pessimistic, and when they swing over to optimism they are inclined to go too far. During the past nine or ten months they have been extremely pessimistic, for they discovered that all the forecasts and predictions of leading business men and others were unfulfilled, and with no hope of fulfilment. Now it is said that the first definite feeling of optimism regarding business conditions is generating throughout the United States. Commodity, prices are said to have moved up a little, and there has been a flutter on the New .York Stock Exchange, and one wonders what it is all about and how it comes al;out. The United States Congress during its recent. session passed several Acts involving the expenditure of thousands of millions of dollars, the very first of such mea-

sures to be passed being the Reconstruction Finance Act intended to help banks, railroads, etc. Other Acts of a somewhat similar character were passed subsequently, the whole object of the legislation being reflation or inflation. This legislation is now in operation, with the desired result of raising commodity prices. It is difficult for us to visualise or to realise how much of this is “playing politics with prosperity.” At all events we would not put such a thing past either of the political parties. The Presidential election is now in full swing, and will not be decided until November. President Hoover is the Republican candidate., and his chances of re-election do not look very rosy. He has a very powerful opponent in Franklyn Roosevelt, at present Governor of New York State. Naturally the Republicans desire to make political capital of everything possible, and this revival of optimism serves their ends admirably. There is some movement in cotton, but it appears to be artificial. A group of cotton millowners backed by powerful banking interests, with the active co-opera-tion of Mr Eugene Meyer, who is the Governor of the State-established Reconstruction Finance Co-operation, have formulated definite plans for liquidating 3,000,000 halos of cotton. Apparently the mill-owners will be financed by the bankers, and the Corporation, but what is going to happen to the products of the cotton mills? They must be dumped on the consuming markets, and sold below cost of production. It is easy to understand the advance in the price of cotton, but it is not so easy to visualise a rise in the price of the finished product, and it is the volume of business in the consuming markets that regulates the prices of commodities.

This alleged revival of optimism in the United States is bound to be short lived, for it has nothing solid on which it can thrive. The depression has reduced the Americans to such a state that they are eager to clasp any straw that by any chance or delusion will make them feel optimistic. The root causes of the depression are reparations, War debts and tariffs, and official Americans aer unwilling to discuss these important matters at the world economic conference. Until these matters are finally and satisfactorily settled there can be no real prosperity. The Hoover moratorium with respect to war debts expired on June 30, and if the matter is not dealt with further the debtor nations of Europe must pay to the United States on December 15 a half-year’s interest ' and amortization, and unless payment is received mainly in goods the debtors must pay in gold. A renewal of the flow of gold to the United States, to be sterilised when it reaches there, will revive the depression and intensify its tragic consequence. The American optimism is spurious because it is artificial.