DEPRESSED U.S.A.

Greymouth Evening Star, 25 October 1930, Page 10

DEPRESSED U.S.A.

BURSTING OF THE BOOM.

Th© tidal wave of business depression which struck the United States last year with terrific force, and of which the Wall Street crash in November was blit a sytnptom and not the primary cause, still flows, leaving a great toll of industrial casualty and human misery in its wake, says the 'yjaily Telegraph’s” New York’s correspondent. Trade returns published recently, indicating a general decline variously estimated at from 15 to 20 per cent., furnish material for review by econo* mists, who are usually more pessimistic in their survey of the situation than the general public. But the tragic consequences of hard times and the real meaning of the bare figures are best revealed by personal inquiry and observation in town and country. During the last few v/3-jW I have visited manufacturing States of the East, find also agricultural sections of the Middle West, and have just returned to New York from a tour Soiith.

Everywhere one finds the same complaint—one of the worst depressions in the history of the country, with no signs of quick recovery. The trains iii which one travels are carrying far fewer passengers and less freight than usual.

The “round houses” in which rolling stock is stored pending the return of good times, are unduly taxed. In New York. Boston, Philadelphia, Chicago, and St. Louis, many of the great stores and business offices have reduced their staffs considerably, in order to meet the,new conditions and lessen the cost of operating. Because of the uncertainty of trade and decreased bifying, traders hesitate in their purchases from wholesale houses.

The Only rush to be seen nowadays in the big shops seems to be at the bargain counters, where inducements of 50 and even 75 per cent reductions are daily advertised. In one of the biggest New York stores silk stockings, usually sold at 10s 6d per pair are marked down to 3s and 4s. In mariy establishments ladies’ highgrade dresses arid costumes, for which ono usually pays £l2, can now be bought, for £4.

Th© explanation is that these goods must be sold at any price before they become a drug on the market. Chaiii competitors of the independent shops—are increasing their sales, but their wares consist almost exclusively of household necessities, such as groceries and kitchen utilities. The fashionable restaurants are doing badly, and even the minor restaurants ar© suffering, because people have discovered that two meals a day in hot weather are betteT tlrau three. The reason w T hy underground railways, elevated trains, and trams are more crowded than ever is in part because people are finding less us© for the motor-car and taxicab.

Agriculture is the chief industry of the United States. It is estimated that roughly one-third of the people are engaged in farming or pursuits related thereto, and that the welfare of the people generally depends on cultivating and marketing the produce of the soil. Agriculture is badly hit, and there is abundant evidence that the Southern States, where agriculture is the main source of revefifte, are suffcring most. .Commodity prices, more particularly wheat and cotton, are at record lows.' An entire week devoted to a survey of North Carolina revealed conditions wliich those who live in New York and other big cities in the Northern States would have believed incredible.

North Carolina is advertised to the world as “leader of the new South” — a South which will regenerate conditions by diversified and scientific agriculture and by increased manufactures. North Carolina is famous for tobacco and cotton production, and its textile mills. It has more cotton mills tlian any other State in the Union, and is first in the number of spindle hours.” It has the second largest aluminium plant in the world, and the largest pulp paper mill in the United States. North Carolina is proud also because of all the States it ranks as the second largest in payment of Federal taxes. North Carolina to-day fs sorely afflicted. In the County of .Gastonia, North Carolina, there are one hundred and forty cotton mills, but many of them are closed and the others are running on part time only. In the city of Gastonia, where recent labour riots precipitated by Communists took place and a chief of police was murdered, there are over forty mills, but few wheels' aro turning to-day. . Tile caiise assigned is over-produc-tion. In the fat years of the war, which brought prosperity to Southern agriculture, many new' mills were built in order .to supply a demand which proved to be temporary only. In Loray, just outside the once thriving city of Gastonia, a mill was built to Manufacture fabric from motor tyres. The pay-roll amounted to several thousand pounds per -week. It was closed when I called, because the demand for tyres had declined to a point where continued operation would have been possible only at a serious loss. VAGRANT WORKERS. In many parts of the country thousands of textile workers are unemployed. They live at the best of times in’ miserable conditions. Most of their pay goes to the local grocer, who supplies- goods on credit, and to-day, with mills closed, their lot is pitiable indeed.

A large number of mill workers in ’tho "South have been lured from mountain homes by prospects of good wages, and to-day, its I know from my personal experience in travelling hundreds of miles by niotor-car, many are roaming on- foot from one district to another in search of work, the parents carrying the household' goods with them, and a number of poorly Clad, ill-fed' children trailing in their wake. Pellagra, a disease caused by under-nourishment, is rampant in many districts, and can be cured only by a varied’ dint iVhicli the victims ai’e unable to afford.

The only remedy for tile existing • surplus- of cotton- alicl* wheat seems to be either to increase the domestic demand or to increase foreign sales. A canipaign has been started to persuade everyone in the United States to wear a clean shirt every day, and clean underwear twice a week. Another crusade appeals to all patriotic Americans to eat more bread. Foreign export sales corporations are being [Permed’ with- euper-salesmanship at the helm to promote sales abroad.

Those who know best predict that the recovery of the United States from its present depression will not be speedy. Unemployment remains a serious factor, but wages in most cases are still very high. In view of the present cost of living, which does not reflect tho record low prices in commodities, the unions are preparing to fight desperately against any attempt to reduce wages. World-wide economic conditions and tho hostility created» abroad by the tariff aro viewed as discouraging any early return to the good times to which most Americans had become accustomed as the inevitable accompaniment of a “new era.” It is predicted by many that the country, before its return to normal prosperity, must go through a period of deflation similar to that which has taken place in many countries abroad, and that the high standard of living to which the majority of the American people had attained during the .period of “war prosperity” must be revised approximately to the conditions prevailing before the big boom started.

One of the many uncertain features of the present situation is the fate of the instalment system of purchases under which the majority of Americans have bought their motor-cars, radios, vacuum cleaners, and domestic furniture. The prediction freely made some years ago that the instalment system would crash at the first sign

of a slump has not been verified. If, however, the savings bank’ accounts become exhausted, the breakdown of companies established to finance the partial payment plan would seem inevitable. and with the return of tho goods to the dealer a market already oxerstocked would bo urther glutted. To avoid breakdown a moratorium suspending payments until better times arrive has been discussed, but such a plan is criticised in advance as a counsel of despair likely to do more harm than good.

A. characteristic of the slump of 1930 in America is that all parts of the country and al! classes are suffering, and not merely sections, which has .been the case in some previous depressions. The manual toilers and middle classes are affected by unemployment either part or complete, and the demand is made that Congress introduce. immediately a Bill providing for a five-day week in order that employment may be more equally distributed. The rich and the moderately wealthy are affected by the decreased earning power of capital and tho unexampled losses in the stock market crash.