DANGER SEEN OF DEPRESSION

Press, Volume LXXXV, Issue 25736, 23 February 1949, Page 5

DANGER SEEN OF DEPRESSION

WORLD ECONOMIC TRENDS AUSTRALIAN WARNING TO U.N. COUNCIL (N.Z. Press Association—Copyright) (Rec. 8 p.m.) NEW YORK, Feb. 21. A warning that present deflationary tendencies throughout the world held the danger of another vast depression was given to the United Nations Economic and Social Council to-day bv the Australian delegate (Mr James Plimsoll). Opening a debate on world economic trends. Mr Plimsoll said that the deflationary tendencies shown in the recent United Nations economic report and the present growth of unemployment emphasised the responsibilities of the United Nations. “We do not wish to overemphasise the present movements, but they are a warning that the world economy is reaching a stage where it can no longer rely on pent-up war-time demand and reconstruction,” he said. “It must now rely on increased consumption.”

Mr Plimsoll said that there was a need for some sort of guarantee of markets for goods produced. The United Nations report had mentioned surpluses in sugar and cotton. That was a paradoxical situation, as the world undoubtedly needed all the food that could be produced. The solution seemed to be the extension of commodity arrangements as a means of bringing exporting and importing countries together in a common plan. Mr Plimsoll defined three "ways of increasing food production; (1) an improvement in means of production: (2) more capital equipment and more investment; and (3) inducements to countries to expand production. Mr Plimsoll said that marketing arrangements with prices fixed within defined limits would give a needed assurance to farmers to expand production.

Mr Plimsoll said that the Australian Government felt that efforts should be made to increase private investments. “Private capital does no harm at all,” he said. “It does a great deal of good. It must observe the laws of the country of investment, but at the same time the Governments of those countries have the obligation of providing stabilitv and security for private investors.”

U.S. Delegate’s View Mr Willard Thorp (United States) told the council that recent drops in American prices did not mean that the United States was approaching a depression. “It would be a bad’ error of judgment to take a relatively small decline in employment or even a sizeable decline in a few prices as an indication that the United States economy is going into a depression,” he said. Mr Thorp said that it was an encouraging sign that inflationary pressures in the United States were abating. He added that one sign of a more balanced economic situation internationally -was that the American surplus of exports over imports, which stood at 11.300.000,000 dollars in 1947, had fallen to 6.500.000,000 dollars. “This is clear evidence of progress towards world economic recovery,, but it does not mean that the extraordinary steps in the form of financial assistance which have been taken by the United States Government can be quickly reduced.” he said.