FINANCE AND COMMERCE.

Press, Volume LXIX, Issue 20789, 24 February 1933, Page 12

FINANCE AND COMMERCE.

WORLD ECONOMIC CONFERENCE. | I WHAT CAN IT DO? .IV.iM.LLr WitilTE.T ?OK THK PRSbS.,' | By Haktijjy Withers.J Some people are beginning to doubt tvhether the Economic Conference, originally expected to be held' last autumn and now postponed until sometime next summer, will ever meet at all, and a far greater number of sad-eyed observers are wondering whether, if it does meet, it can do more good than harm. U is natural enough that such defeatist views should be current, in a. world that has been demoralised by the results of its own folly and bad temper: but there is no need to fear that the Conference will not meet, and it wiU at least do something by bringing all tho best brains of all the nations together, to exchange ideas and strike sparks out of one another. Tt is even possible that there may be some practicable results. As a. preliminary, it is generally admitted that some settlement of the war debts question must be secured, before the debtor countries on the east of tho Atlantic can know Avhere they stand; and it is because Mr Roosevelt has apparently decided that he can do nothing in this matter before he takes office in March, that postponement of the Conference until nest summer is assumed to be inevitable. But it is also believed, by those who ought to know, that the question of war debts is closely bound up with that of England's return to the gold standard, because it is understood that America will insist, as a condition of any revision of her claims on England, that the latter should, on some terms or other, put the pound sterling back into its golden fetters. The Gold Standard. If this bo so, and if negotiations on 'heae lines ean be successfully concluded befdru the Conference meets, a very big part of its task will have been done; for a return to the gold standard by England and the many countries that have abandoned it with her, would go a long way towards that restoration of confidence which is the beat result that ean be hoped from the Conference. But it is going to be extremely difficult to induce England to go back to gold, because owing to the steadiness of England's internal price level and the faE in the gold prices of raw materials, English industrialists and exporters have derived an advantage from the _depreciation of the pound, which has enabled them, to compete with more success than hitherto in their own and other markets. With the result that England has /won back, in a year of 'extreme depression, her old position o*' the country with the biggest exports. At the same time, the British financial authorities are believed to be determined that they will not go back to gold_as long as thore is any chance of being driven off again, because two great creditor countries will neither spend nor lend abroad, and consequently make the gold standard unworkable by heaping up gold that is needed in other countries. How ean England be assured that America can be cured of_ the eccentric sentiment that makes' her expect other countries to pay what they owe her and at tho same time want to sell them goods—and securities also when Wall Street has a queasy fit—and carry goods and passengers for them on ships heavily subsidised by the American taxpayer, and to buy as little as possible! No international standard ran work, whether based on gold or bimetallism or even on .mere .paper, if the richest country in the world insists on one way trade. America's Position. On the other hand, it is evident that th© Americans are very eager to get England back on to gold, because they see that if the sterling block is firmly enough established, the small and probably diminishing number of gold standard countries will he left to earry a huge and useless golden baby. The state of the United, States finances gives them a good reason for abandoning the ivastef ul system of subsidising merchant ships to run at a loss, and at tho same time American exporters of automobiles and machinery, aiid American farmers who want to aell their wheat and cotton abroad, are beginning to see that high Protection is a two-edge*} weapon that cuts a hand that wields it clumsily. There' is thua at least a possibility ofa war debts settlement, accompanied by ' a promise by England to return to gold, at a new rate to be determined in the light of recent and future experience, subject to a revision of America's policy with regard to tariff rates and .shipping subsidies. As to the debt .settlement, its most practicable form . has been indicated in the War Debts supplement to the "Economist" of November 12. Following the Lausanne precedent, the debtors would compound with a lump sum payment, to be Taised by loans in America, whoso investors would thus provide their Government . with funds to meet an uncomfortably large deficit, and would do so by subscribing for bonds which would be well secured on the debtors' budgets. The War Spirit. , If preliminary arrangements of this kind could be settled, tho work of the Conference would be half done before it met. All that it would have to do would be to recommend the general adoption of the example of the United .States, in tariff revision, by the highly Protectionist countries, and arrange moans by which, through the provision of international credits, exchange restrictions could gradually be abolished. There would be no need to discuss the creation of a new monetary system or the reinforcement of the gold supply by the use of silver. If once it were known that America had consented to adopt a more liberal fiscal policy, and that the gold standard was to be restored, all that economic measures can do to restore confidence—the lack of which is tho real reason of ihiß miserable crisis—would have been done, and rising prices would soon begin 1,0 "bring the primary -producers within sight of a return to solvency, and the vicious circle would be broken. But if disappointments such as followed the Hoover suspension of 1931 are to be avoided, economic measures would have to bo accompanied by the exorcising of tie war spirit, and the establishment of real peace in Europe. As long as the war spirit survives, no economic reforms can permit .mankind to enjoy the era of abundance, which'science and enterprise lave rendered possible. . 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NX REFRIGERATING CO., LTD. NOMINATIONS FOR DIRECTORS AND AUDITOR. The following nominations have been received for the four vacancies on the directorate of the New Zealand Eefrigerating Company, Ltd.: — Mr "W. H. Clark, Christchurch. *Mr H. A. Knight, Kacecourse Hill. Mr J. Mac Gibbon, Christchurch. "Mr G. E. Mannering, Christchurch. Mr W. Morley, Christchurch. Mr W. S. Newburgh, Christchurch. Mr G. V. Pcarce, Waitotara. Mr.Mervyn W. Stevenson, Christen urch. * Signifies retiring directors. Nominations for the position of auditor are not required to be sent in to the company before the meeting, but may be made at the meeting. Those nominated so far are:— Mr E. K. Caygill, Christchurch. *Mr J. W. K. Lawrence, Christchurch. Sir W. H. Nicholls, Christchurch. 'Signifies retiring auditor. It" is understood that . Mr : J. Boy Smith, Christchurch, .will also be nominated. The annual meeting of the company is to be held on Tuesday next. N.Z.. INVESTMENT TRUST. NEW 'COMPANY. REGISTERED. A new company, the New Zealand Investment Trust, Ltd., was registered at "Wellington on February 16, with a capital ol £200,000 in £lO shares, and an issue or £i!O0,O00 oi s'per cent. mortgage convertible debenture stock. The company is .said to be capitalised on the model of British and Scottish investment trusts, and seeks an investment fund of .£1,000,000 divideu into £200,000. ordinary stock. £300,000 5 per cent, cumulative preference i,tock, and £500.000 of 5 per cent, first debenture stock. The first directors are Mr L. R. C. Macfarlane, of Culvcrden, Canterbury, ;tnd Messrs D. J. McGowan, G. I. Sprintshall. *nd A. W. Gibson, of Wellington. The otlior signatories to the memorandum are Messrs E. "W. Hunt. D. L. Irwin. L. H. Heslop. and J. H. Turner, all public accountants, oi, Wellington. . BRITISH BALANCE OF TRADE. IMPROVEMENT ON 1»31. ,D,lirt> FSBBS «SOtl«lOS-M «XCI« 10 TEt-BGntPH—cof yarom;.) f Received February 'J3, 3.5 p.m.) LONDON. February 22. The Board of Trade estimates the LaJun.e of trade for 19TJ as follows: .£ i ,„,.(. .. : 11,000,000 £s% :: •• 0 . Excess of import, •• 289,000,000 This is a decrease of £119,000,000 compared with the excess of 1931.. To this must be added excess Government payments' made overseas, making a total excess of ® 314,000,000. • The invisible credits include £70,001),000 from shipping; £140,000,000 m-. come from overseas investments; £30,000,000 from commission; £10,000,000 from other sources. A net deficit of £59,000,000 is shown, compared with £104,000,000 in 1931, and a surplus of £28,000,000 in 1930. The improvement for the year would have been £75,000,000 but for tho American debt payment. The Board of Trade states that probably there are sufficient moneys in sinking funds, and repayments of overseas loans to Britain in. 1932 to balance the deficit, apart, front the payment to the United States. 77 PRICE LEVELS.. RESTORATION AND PROSPERITY. "Restoration of price levels as the •Tsure for the depression is advocated by Labour'politicians arid others, but a practical way of bringing this about without resorting to dangerous inflationary expedients has not been disclosed. The Cleveland Trust Co. deals wrtn the question ot restoring price levels in its December "Business Bulletin. It points out that the depression is entering upon its fourth yoar, and that a period of bad times so prolonged has been experienced in the United States only on three previous occasions, the 'twenties (four and a half years), the 'forties (nearly six years), and the 'seventies (six years). There was also the depression of the 'nineties; which really lasted about six years, but was interrupted by a hve months' period of prosperity. In those times the belief was widely held that the restoration of normal conditions would not bo possible unless the general level of commodity prices could be lifted back to something like predepression figures. However, business revivals came and prosperity returned "without the restoration of the earlier price levels." The fact, however, that expansion of industries on the old scale and rapid increases of population cannot be looked for again as factors m rehabilitation make the present depression different from those of the past and challenge the conclusion that the depression will cure itself in automatic fashion- as those of the past without governmental action. The Cleveland Trust Co., however, condemns any &V tempts to restore either the old prices or the old price relationships "through the hazardous expedients of deliberate monetnry inflation." "Most of the nations of the world," it remarks, "have already experimented wrtn cheapening their money and casting loose from gold, but none of them has attained any success iii re-eßtahlishing earlier price relationships that would encourage us to follow those examples," ' The Government should make a beginning, the trust says, • by directing its energies toward the restoration o* the export trade by lifting tariffs w* other trade harriers to permit the international exchange" of raw materials;. This might be effected by barter. "The action that is needed is for the Federal Treasury (of the United States) to stop driving private capital out of business and into Government securities," adds the Cleveland Trust. Similar advice might be offered to other Governments whoso excessive taxes are crippling privato industry.