The Bay of Plenty Times SATURDAY, APRIL 5th, 1941 ECONOMIC RECESSION

Bay of Plenty Times, Volume LXIX, Issue 13307, 5 April 1941, Page 4

The Bay of Plenty Times SATURDAY, APRIL sth, 1941 ECONOMIC RECESSION

The trade and banking figures recently released show a distinct tendency towards economic recession. The latest trade figures are for the month of February, and these show that tlie exports tor the period amounted to £5,960,000, as compared with £b,115,000, m t ic corresponding month of last year, a decline of over £2,000,000, which is rather serious. However, it may be that there was less shipping available, but there can be no doubt that the ban on meat exports has seriously affected the position. There has been no variation in prices. Taking the two months of January and February- the exports for the two months amounted to £12,731,000, as compared with £14,435,000 in the corresponding two months of 1940, a decrease of just under £2,000,000. There is no question about the export situation deteriorating. And the position must become worse, when butter is added to the banned exports. The export ban on meat affects the South Island in the main, but should butter come under the ban, as seems inevitable, then the North Island would be in a serious condition. What are the likely effects of the new situation that has arisen? The export income is the basis of our economic system. If the exports contract then the London funds would contract, and should that come about then we would be forced to more drastically reduce imports, and that would lead to much higher prices for imported goods than even the high prices that are current now. If the people are obli{ jed to pay more for goods and there is no increase in the wage-scale, and even if there is, the standard of living must go lower. One can see a whole heap of economic troubles emanating from this. Some people have suggested that the loss certain to fall upon the meat producers should be shared *'by the whole community. To bring this about it is suggested that the Government should purchase the meat in store. Perhaps a better plan would be for the State to make a percentage advance to the producers on the security of store amounts, and then hold off until the stored meat is liquidated to find out the loss, p£,rt of which must be borne by the producers and the rest by the community. The position that has arisen makes us wonder what has become of the insulation policy that was preach jtl by the politicians in recent years. When butter is banned the authorities will be in a difficult position, and it remains to be seen how the Marketing Department will deal with the situation. The imports for the two months January and February amounted to £5,045,000, as compared with £7,330,000 in the corresponding two months of 1940, a decrease of over £2,000,000. This contraction may be due to to transport difficulties but whatever the cause, the effect on the prices of imported goods must be to force them up, and they are high enough already. There is no doubt about a serious view being taken of the situation. The shrewd investors in Stock Exchange securities apparently see difficulties ahead and share values shows a tendency to fall in values. The trade situation is causing money to accumulate in the banks. The returns of the trading banks for the four weeks to February 24, show that the free and fixed deposits held by the banks now total the huge sum of £BS-069,580, of which £56,059,673, consisted of free deposits or current account balances, and these disclosed an increase of £4,000,000 over the January figures. These huge deposits must be embarrassing to the banks, for the demand for bank accommodation at £47,000,000 shows very little change. Our economic position is very unhealthy, and as the Prime Minister has said there are hard times ahead.