SLUMPS AND BOOMS

Evening Post, Issue 66, 15 September 1936, Page 4

SLUMPS AND BOOMS

N.Z.'S EXPERIENCES

The crises and'depressions of New Zealand since 1860 were^the subject of an informative talk by Dr. J. W. Mcllwraith to members of the Institute of Pacific Relations recently.

The last' depression period was contrasted with the cataclysmic period of 1877 to 1896,: which though not descending: upon us .quite: so rapidly caused conditions in New Zealand to sink-to unprecedented depths. One of the causes of this depression was the discrepancy between1 the supply of money, i.e., gold, and the amount of goods in production. .. New manufacturing processes were being discovered and technical improvements utilised which caused production to go. ahead rapidly, while at the same time gold reserves were increasing at a very slow rate owing to the decline of the goldfields1. •Another' ; factor,, which increased difficulties .was the abandonment ,of-;the .bimetallic standard' by ■ countries' such as France and Germany. •■ ■■, ■■ : : ■.■■■■ . : ■ During this period 12,000 more people left New Zealand than entered it, in some districts three-quarters of the iarmer went bankrupt, and unemployed men were offered is 6d a day by Sir Harry Atkinson, for a shilling of which he undertook to feed tliem.: Financial institutions Buffered; and %he. Govenv ment. came-' to the assistance of the •banks which proceeded.to unload land :at ;aj rapidrf ate.-.. 'They' were, not •to know what a land boom there was in store'fdr the country.

'."Then came the,;discovery of new goldflelds' at Johannesburg and the Yukon coincident, with the discovery of the cyanide process of recovery. Gold poured.into the banks,, increasing the reserves/ overdrafts: were.: increased, arid jnpriey was more "available than ~gooss. : .Two huridredijahd fifty million pounds'.'worth of notes were issued and prices rose rapidly, reaching amazing heights during the war period. From 1917 to-1920 the land boom was at its peak, property passing from hand to hand in many cases without the purchaser even seeing it. A fantastic number of mortgages was carried by properties. During all this period the "Government took no steps to profit from the land boom and: chose this time to cut the Civil Service salaries 10 per cent.. Dr. Mcllwraith produced figures and graphs pointing the parallel rise and fall of other goods such as farm produce with the- rise and fall of land prices. Bankruptcy, rates, in inverse ratio, births, marriages-^the war period excepted-^-even divorce, and gambling were shown to be strongly influenced by yarifitiph in pride'levels. "■ In this connection Dr, Mcllwraith indicated that a rich field existed here for the social investigator to work upon.