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Evening Post, Volume CXX, Issue 141, 11 December 1935, Page 14

A im-ge body of European economic opinion inclines to the view that the prosperity of other nations, and particularly of Great Britain, is more or less related to that of the United States. Certainly the full force of the great depression swept through the States like a hurricane. It may be recalled that the world depression began in that country with a catastrophic fall in stocks and other securities on the New York Stock Exchange, in Novem- . ber, 1929. This was the financial shotthat was "heard round the world," and its echoes are still audible in many countries. However, the great improvement in trade, industry, and finance in the United Kingdom—in spite of the obscure international outlook—is being followed by steady recovery in America. The Guaranty Trust Company of New York, the fifth biggest bank in the United States, is able to report,that "the immediate outlook for business, as far as purely economic factors are concerned, may be regarded as fairly favourable." But the trust, in its latest review of business conditions, makes a proviso that' "if further restrictions on individual initiative, Government competi-, tion with private enterprise, and excessive public spending are avoided, and if peace, is maintained among the leading nations, then it is reasonable to suppose that the gradual improvement of the last three years will continue." THE PROBLEM TO BE FACED. "How swift the progress towards recovery may be," the trust remarks, "will depend largely on the freedom with which business is permitted to operate. The revival that has taken place thus far has been based in part upon.public expenditures financed by large, purchases-of Government bonds by the banks. . As long as this situa-tion-continues, the recovery will contain unsound and unstable factors. "The orderly transition from public to private expenditure as a means of support for a considerable section of the population is a problem still to ! be faced. "In most respects, the business situation in this country at present is more susceptible of appraisal on' the, basis of economic factors than it has been ! for some time. Recent Court decisions ! have pointed to a likelihood that, ' thanks to the Courts and the Consti- : tution, business will have protection ; from illegal Governmental restrictions. A DISTURBING POSSIBILITY. "The principal uncertainty- of a political nature in the present business outlook," the trust points out, "is the possibility of war in Europe. But as long as the conflict between Italy and Ethiopia remains localised, its effects on American business are likely to be relatively unimportant. But while there remains even a possibility that the contest may develop into a general European conflagration, that possibility .will constitute an unsettling factor in the business outlook. Even if such an unfortunate development should occur, there are a number of reasons for believing that its first repercussions on American business would be less violent than were the effects of the outbreak of the World War in 1914. Nevertheless,. the financial and economic disorders that would eventually result from a European war would be both disastrous and world-wide. .:: "Fortunately," remarks the trust, "it appears that the leading nations are ;keenly aware of this danger and will go to great lengths to avoid it. The possibility of the United States being drawn into war seems even more remote." DREAD OF INFLATION. After an examination of factors in the trade revival and the increase in stability, the trust directs attention to "one element of doubt and misgiving that stands out above all others." This element is the threat of inflation ■which will continue to be "a strong deterrent to business recovery." Not until the Budgets of the principal nations are brought into balance, not until the closely related problems' of currency stabilisation, international debts, trade barriers, and gold distribution are solved in a sound and practical manner, will this dread disappear. "With its large resources and its relatively high degree of economic selfsufficiency, the United States could,' by resolute action, balance its national Budget within a short time. But substantial progress in this direction must be made before any assurance against unhealthy credit expansion can be feit, tfor with its present scale of revenues and expenditures the Federal Government depends upon the banks for its current cash requirements. "The problems involved in international currency stabilisation are even more complex," the trust continues, "and will probably require co-operative action for their solution. As- far as can now be foreseen, the outlook for such action in the immediate future is not bright. Fortunately, the United States is in an economic position to make considerable progress towards recovery, even in the face of international financial unsettlement. "A definite end to the depression can come only through a recovery of the normal, sound, and robust type, in which business is free, confident, and self-reliant. Resort to artificial stimulants, such as currency devaluation, partial bimetall, the 'economy of scarcity,' huge Governmental spending, and the like, must inevitably fail in the end, although some of them may temporarily seem to succeed." CORDON AND GOTCH REPORT The directors of Gordon and Gotch yAustralasia), Ltd., Melbourne, report ior the half-year ended September 30 that net profit for the half-year amounted to £42,343 10s lid, less provision for taxation, Federal and State, f£8795 5s 6d, leaving £33,548 5s sd. To this sum is added the balance carried forward from last half-year, £28,224 8s Bd, making available the sum of l£ 61,772 14s Id. The directors recomimend that this sum be apportioned as .follows:—Payment of a dividend at the (rate of 8 per cent, per annum on 100,000 shares, £4000, and of 10 _per cent, per annum on 500,000 ordinary shares, £25,000; transfer to reserve jfor contingencies. £4000; and carrying 'forward £28,772 14s Id. NATIONAL MUTUAL BUSINESS. The National Mutual Life Association tof Australasia, Limited, reports that the new business written by the association for the year ending September 80, 1935, shows a substantial increase as compared with that of the previous the total being £10,137,325 against £9,119,606, or an increase of '£1,017,719. The latest total is the largest on record in the history of the association, the previous record being £9,869,349 for 1928-29. The new bus? ness for the year just ended consists of 26,941 policies, against 23,056 policies for the previous year, while the new annual premiums amount to £372,485 against £329,488.