PRICE RECOVERY

Dominion, Volume 23, Issue 169, 12 April 1930, Page 7

PRICE RECOVERY

BETTER YEARS AHEAD AUSTRALIA’S TROUBLES EFFECT IN DOMINION Dominion Special Service. Christchurch, April 11. Explaining the exact business relationship of Australia, New Zealand, and England, and interpreting Australia’s present unfavourable position. Professor A. 11. Tocker, of the Chair of Economics fit Canterbury College, in a luncheon address before the Canterbury Advertising Club, predicted a poor year in New Zealand in 1930, followed by two years of gradual recovery. After dealing with the financial relationship between Australia and overseas countries, the speaker continued: “We are not responsible for what is occurring in Australia, but we are closely linked with her, and we cannot help being profoundly affected by any change that affects her. She is by far the bigger country, and we are inevitably affected more by her than she would be by us.” Many details about Australian banking and about Australian tariffs had not been published, continued Professor Tocker. Beferring to the tariff, he said that the raising of the exchange rate to 6 per cent, meant a 6 per cent, premium on goods from overseas, which ought to be effective if certain imports were prohibited, and high tariffs put on others. Business men would assume that these changes were permanent, and they would make permanent plans to make the goods in Australia, but in time the tariff might come down, and they would then be left high and dry. The tariffs must ultimately be brought down or Australia would be permanently saddled with expensive production. Higher Tariffs. Personally, Professor Tocker said, he did not think that the rest of the world would approve Australia’s action in raising tariffs. Throughout the world to-day there was a good deal of depression following the Stock Exchange collapse in the United States, similar to the depression which followed the Knickerbocker Trust collapse in 1907. Professor Tocker quoted from an English financial authority which stated that the depression was shown in the United Kingdom in reduced exports of manufactures, and in a more than seasonal increase in unemplovment in very many industries. The difficulties were increased and recovery postponed by the renewed fall in commodity prices. The troubles in overseas markets had become more acute, and difficulties were arising in the financing of exports. Another adverse factor was the continual stagnation in international lending. With these developments it was not practicable to suggest a date by which improvement would be realised. “We can see as yet no evidence of recovery, no evidence that prices have yet touched bottom,” commented the professor. “England fears that low prices for raw material will lessen the purchasing power of the big body of consumers which buys her manufactures, and until that purchasing power recovers she cannot pay more for (he raw material.” He quoted then a forecast from Harvard, U.S.A-, stating that business activity had continued to decline, although some recovery had been shown in January. Further improvements would be made easier by the lower bank rates in America and abroad, which would operate also to stabilise commodity prices. There was some improvement in unemployment which, it was stated, would be alleviated by seasonal activity.

Lpjy Level Tliis Year. “There is nothing particularly optimistic in those reports,” added Professor Tocker, “and optimism or pessimism in New Zealand depends on optimism or pessimism in countries like these. Until export prices recover there is not much chance of recovery, unless costs of production are reduced, which is not likely.” He predicted a low level this year, a slight recovery next year, following in 1932 by a fairly good year. “This is not pessimism, but an attempt to interpret facts, the professor reminded his audience.