EVIDENCES OF RECOVERY

Evening Post, Volume CXVIII, Issue 36, 11 August 1934, Page 12

EVIDENCES OF RECOVERY

OFFICIAL AND OTHER

'"Evening Post," August 11. Is the undoubted improvement in British industry and trade a quickly-passing phase or bused on solid ground? The question is fair to ask, mid it has been asked for some months past; but it is not easy.to answer. All that can be done'is to quote such evidence, om'cia'l and other■wise, as is available, aud leave it at that. The black' cloud of uncertainty over the Continent and the far from settled condi- j lion of domestic affairs in the' United States, do'not afford much encouragement for optimism; but there are certain factors in Great Britain's internal condition justifying at least the hope that its improvement is progressive. The British Department of Overseas Trade, according to advices received by the British Trade Commissioner in New Zealand, reports that "the external trade of the United Kingdom continues to expand." In the first five months of the year imports rose by £34,186,000 to £301,249,000 compared with the corresponding period of 1933. The greater part of this advance was due to larger purchases of raw material*, which normally indicates increased activity in manufacturing centres. Exports increased in the five months by £10,811,000 to £157,608,000, exports of manufactured goods shoeing a rise of £7,600,000. WELCOME RECOVERY.

The '.Midland Bank describes "the welcome recovery o£ British business" as ex- . pressed nowhere more clearly than "in the decline of unemployment over the past year and a half." The recovery, authorities agree, is. confined to. -intevnaj conditions; but so. far there is but little sign of' expansion in the "world's international trade. 'This restriction of recovery," the .Midlaud Bank remarks, "ought, not to be allowed to completely divert attention from tho_ record of British overseas commerce, for internal and external business have important bearings upon each other. ■ Attention is directed to the fact that increased British expenditure on products of countries within the sterling area, has led to heavier British sales within that area. This associated movement must be attributed largely to the health-giving rise in the values of primary products. The bank remarks that gradually a widening demand for British goods may be expected to counter increased purchases ablOad> THE CRUCIAL POINT. Commenting on the . larger volume of imports and, in conclusion, ot .its ; observations, the bank holds :that the crucial fact is that we are not now on the. gold standard, and that in consequence a deficit on the balance ot paymentewere it'to. develop—could be leit to take care of itself; there would be no .necessity, aa when we were on the-gold standard to seek to strengthen sterling -by.deflation", which might place a severe obstacle ii the way of continuance of internal recovery. . . ■■ ; ~.„,.,,„ "On broader considerations suill,. Uieie would be nothing inherently,'.inexcusably, and invariably wrong in a deficit on oui current balance of payments;- there is obviously something illogical-as lias often been, pointed out to America—m expectf ing a creditor country to maintain indefinitely a surplus on her balance ot current payments, more especially it it attempts to obstruct the lending'of that surplus abroad. In the long run, the world will travel further towards recovery .by payitig' off-debts-than by contracting ' new ones. , ' . "We-conclude that our domestw .recovery—assuming all- other conditions, not here considered, are favourable—may continue without giving'rise to any disquietude or-alarm on the ground of even a further increase .in our merchandise imports surplus. Attention should be "directed-to ensuring, that the .other conditions, particularly in the monetary held, Oi-o kept favourable; this one can sately bo ignored."