CAUSES OF SLUMP

Dominion, Volume 24, Issue 225, 19 June 1931, Page 10

CAUSES OF SLUMP

Trade Commissioner’s Views

IMMENSE PROBLEM International Action ‘There is an immense problem before the world, and we must look to international co-operation to solve it,” said Mr. L. A. Paish, 0.8. E., his Majesty’s Trade Commissioner, during an address given to the Wadestown and Highland Park Men’s Society last evening. Mr. Paish spoke on various aspects of the depression mainly as it affected Great Britain, and traced some of the causes of the slump—shortage and maldistribution of gold, frenzied speculation, political unrest in the East, high tariff walls in Europe, and what had been called the series of boom harvests. Many obstacles in the way of international trade were being removed, he said, and there seemed to be a growing appreciation of the idea that the greatest trading good came from bringing the man who wanted to buy to the man who wanted to sell, with the least possible difficulty, and leaving them to do business together with the least possible interference. Smaller Demand for British Goods. “The fall in the price of silver in the East, where we had formerly such a great trade, has impoverished the East and lessened the demand for British products, ’

he said. “The political unrest in China and India has also had its effect in reducing the demand. In Europe there is an increasing spirit of nationalism in. which every country is endeavouring to make itself self-supporting. Industries are being protected behind high tariff walls, and our goods are being shut out from our former consuming markets. “No one nation, let alone a small group of individuals, can hope to make much impression on this great problem, but much has already been done. Steps have been taken and are being taken to check frenzied speculation. The gold question is being tackled, but the solution, if found, has not been put into operation. Many obstacles in the way of international trade are being removed, and much is being done to-day toward the elimination of waste in production and distribution. Let us wish the movem-nt all success.” Must Increase Efforts. These were international problems, he said, but Great Britain still had its own national p/oblems to solve. The chief one was that of finding work for the unemployed, and as overseas trade was the clear cause of the trouble his department was vitally interested. Great Britain had a favourable trade balance of some 39 millions sterling, and it seemed that the solution of the unemployment trouble lay in increasing efforts. The price received was not of first importance, provided it was adequate to maintain the favourable trade balance; prices must fall. The question was, how could that be done without lowering the standard of living. Mr. Paish said he believed the individual in Great Britain could do much himself, simply by the exercise of personal economy. He knew there were people who believed that in a time of depression it was desirable to increase spending to keep money in circulation. That might be so in a self-supporting country, but he did not think it was true of a country like Great Britain, which lived on its export trade. In Great Britain spending on luxury goods, whether made at Home or imported, simply tended to maintain the cost of living, not the standard of living. Every £lOO saved and invested cheapened money, and cheap money was one of the first requirements for obtaining cheap production and distribution. Position in New Zealand. “You in New Zealand have an unfavourable trade balance, which is now showing itself in the unfavourable rate of exchange,” Mr. Paish proceeded. “Last year I think there was an adverse trade balance of about 7 millions sterling. In my view that is one of the first things that should be put right. A 10 per cent, depreciation in New Zealand currency of course penalises imports and subsidises exports. To some extent that is good, but as New Zealand necessarily at the present time imports a good deal of her manufactured necessities, the adverse rate of exchange puts up the cost of living, or perhaps in the present circumstances it would be better to say retards the fall in the cost of living, which is just as bad. “To balance the oversea trade budget one must either decrease imports or. increase exports, and as much of the imports is necessary it is the imports of luxuries which has to be deprecated. Opinions may differ, but my own view is that when a man sends £5O or £lOO to America at the present time for a wireless gramophone set he cannot be regarded as doing his bit for his country. He is reducing New Zealand credit in London, which is of paramount importance to the country at the present time. On the other hand, as regards necessary imports only, I trust the goods, where reasonably competitive in quality and price, would be British.” Reciprocal Trade.

Dealing briefly with the subject of reciprocal trading, Mr. Paish said that he felt too many millions of British money which New Zr/iland obtained for the sale of its products in Great Britain which it was spending with nations which did everything they could to prevent the sale of New Zealand products in their own territory. “I do not believe in being unduly optimistic,” he concluded. “We have to face unpleasant facts, but it is no good being too gloomy about them. I believe in the essential economic sanity of my own people, and that they will face tin to the unpleasant facts, and apply the remedies essential even though they may be unpalatable. New Zealanders are of the same stock. I hope and trust that they will be the first to rise out of the depression.”