DEFLATION IS BECOMING WORLD WIDE

Grey River Argus, 23 February 1949, Page 5

DEFLATION IS BECOMING WORLD WIDE

Does it Mean Prosperity or Depression ? Discussion by U.N.O. Economic Delegates (Rec 9.50) NEW YORK, Feb 21. A warning that the present deflationary tendencies, which are worldwide, held the danger of another vast depression was given to the United Nations Economic Social Council today by an Australian delegate, Mr James Plimsoll. He opened a debate in the council on world ecnomic trends. , , _ Mr Plimsoll said that these deflationary tendencies have been shown in the recent United Nations economic report, apd with the present growth of unemployment, they have emphasised the responsibilities of the' United Nations. He said:—“We do not wish to overstress the present movements, but they are a warning that- the world economy is reaching the stage where it can no longer rely on the pent-up war-time demand and reconstruction. It must now rely on increased consumption.” •Mr Plimsoll said that there was a need for some sort of a guarantee of markets for the goods produced. The United Nations economic report had mentioned that there are surpluses in sugar and in cotton. That was a paradoxical situation, as the world, undoubtedly, needed all of the food that could be produced. The solution, he said, seemed to be the extension of commodity arrangements as a means. of bringing exporting and importing countries together in a common plan. Mr Plimsoll defined three wavs of increasing food production as follows (1) An improvement in the means of production. (2) More capital equipment and more investment. (3) An inducement to countries to expand production. , Mr Plimsoll said that' marketing arrangements, with prices fixed within defined limits, would give a needed assurance to farmers to expand production. The most important change of the new pattern of international trade since the war was the shortage of dollars, which had prevented countries .from importing as much as they required from America. Mr Plimsoll said that the Australian Government felt that efforts should be made to increase private investments. He said. —“Private capital does no harm at all. It does a great deal of good. It must observe the laws of the country of investment, but, at the same time, the Governments of those countries have the obligation of providing stability and security for private investors.” Mr Willard Thorp, United States delegate, told the council that tne recent drops in American prices did not mean that the United States was approaching a depression. He added: “It would be a bad error of judgment to take the relatively small decline in employment, or even the sizeable decline in a few prices as an indication that the United States economy is going into a depression.”

Mr Thorpe said that it was an encouraging sign that the inflationary pressure in the United States was abating. One evidence of a more balanced' economic situation, internationally, was that the American surplus of exports over imports, which stood at 11.300,000.000 dollars in 1947 had now fallen to 6,500,000 000 dollars.

He added. —‘‘This is clear evidence of progress toward a 'world economic recovery ,but it does not mean that the extraordinary steps in the form of financial assistance which have been taken by the United States Government can quickly he reduced.”