AT ROCK BOTTOM

Hawke's Bay Tribune, Volume XXI, Issue 279, 9 November 1931, Page 11

AT ROCK BOTTOM

DEPRESSION IN AMERICA. RELATIONS WITH BRITAIN. “There is no pessimism, but at ths same timp there is no particular optimism regarding the coming winter in America,’’ commented Mr. P. V. Bolton, representative of a firm of commercial bankers in New York, who arrived at Auckland on Friday by the Sierra en route to Sydney. He intends to visit New Zealand in about two months, and then go on to India. Mr. Bolton expressed the opinion that depression had touched rock bottom. Banking was at a standstill in America, owing to the feeling of uncertainty among depositors. However, optimism was growing, and he anticipated that the recent British election results would have an immediate effect on the value of foreign securities on the New York stock market. While one effect of the slump in America had been the failure of some of the lesser banks, they represented only a very small percentage of the total banking resources. During the past 15 ysars failures represented not more than 3 per cent, of the total resources.

England’s action in going off the gold standard would not affect the United States at all, said Mr. Bolton, and it was generally felt that all countries would eventually revert to the gold standard, though perhaps at a devaluated issue. He did not think that America’s large stocks of gold would become so much dead weight as a result of Britain’s action. In his opinion America would do all she could to redistribute and conserve existing sup plies of gold. Owing to the uncertainty of the position the banks had been compelled to carry more than the legal reserve. The abandonment of the gold standard would stimulate business in England, but at the same time it would aid New York to become the money centre of the world, rather than London. At the present time gold was being hoarded by private persons — another sign of the bad times. An indication of that was the fact that over a billion dollars more paper money was in circulation in the United States at present than ever before in the history of the country. In normal times, the quantity of paper circulation was an indication of the needs of commerce, but now trade was bad, so that there was no demand for money to meet an expanding commerce. Thus the extraordinarily large circulation did not represent requirements of the trade of the nation. , “The general feeling in the United States is one of wholesome interest in Britain, and‘the nation as a whole is glad that England is regaining her trade,” he concluded. “The prosperity of England and America go hand in hand, and the United States always has a great interest in England’s welfare. The world looks more to the leadership of the United States and Britain than it does to the rest of the nations put together. It is necessary that they should be firm friends.”