CURE FOR SLUMP

Hawke's Bay Tribune, Volume XXI, Issue 305, 9 December 1931, Page 10

CURE FOR SLUMP

CONFIDENCE NEEDED PLENTY OF MONEY IN WORLD. PROFESSOR TOCKER’S REVIEW. "There is plenty of money in the world, just as much as there was in the good years of 1928-29, and the world has adequate means for the production of goods... AU that is wanted is confidence on the part of the world’s people.’’ Thus said Professor A. H. Tocker, of the Chair of Economics at Canterbury College. He referred to the recent sensational fall in the value of sterling, and after stating that Europa was in an "economic mess," declared that the trouble was to a considerable extent psychological. When the great body of consumers were afraid to buy, trade suffered, more unemployment was caused, and the downward drift made it apparently all the more necessary for individuals to conserve their finances. One could nut tell to what depths of trade depression such a policy would bring the world. The want of confidence would have almost limitless effects. “CONFIDENCE BREEDS CONFIDENCE." On the other hand, the steady generation of confidence would have just as uplifting an effect. Confidence would breed confidence, and the ultimate result would be the lifting of the world from its present state to one of brisk trade and prosperiy. t Professor Tocker stated that the recent dramatic fall in sterling, together with Sir George Paish’s outspoken statement regarding the seriousness of affairs iu Europe, appeared somewhat alarming. It was stated, however, thfit the volumne of trade on the exchanges was by no means large, and the sudden fall in exchange was probably only one of the erratic movements that were to be expected when heavy selling took place on an exchange unsupported by gold movements or by bank action. British papers up to 31st October which had just come to hand, continued the Professor, were much more reassuring on the British position. The "Man Chester Guardian” commercial supplement of 2'Jth October had a note headed "The Turning Tide,’’ which spoke of newspapers fielled with the reports of increasing confidence, brisk turnover and brighter prospects in the cotton, rayon, silk, woollen and jute industries. That sudden revival, it was stated, was not due entirely to tho fallen exchange. The cause was partly psychological. Just as nothing succeeded like success, so the spurt would grow of itself once the ball was set rolling. The question was whether the sudden spurt was a miniature boom that would fizzle out, or whether it was the beginning ■>f a real trade revival. APPRECIABLE RECOVERY, The "London Economist" had been publishing a weekly index number of prices of staple commodities entering into world trade since tho gold standard was suspended. During the first three weeks British trade was about 8 per cent., but world prices fell by nearly 5 per cent. By the end of October world prices had recovered, and were higher than in niid-September, while British prices for these commodities had risen nearly 15 per cent. Those reports also supported the view that there had been an appreciable measure of recovery in Great Britain. In other countries, however, and particularly in those which remained on the gold standard, said Professor Tocker, the strain appeared to have been increased rather than lessened. The scramble for gold still continued, and many countries: had been converting balances held overseas into gold for import, or taking other means of repatriating their funds. AMERICA’S HEAVY LOSSES. The "Economist” reported that up to tho end of October the United States of America had lost about £150,000,000 worth of gold in that way. The United States was also faced'with an enormous Budget deficit, which might approximate £400,000,000 for the present year, and it was stated that so far no steps had been taken to meet that deficit. The United States deficit last year was of about £50,000,000. In both America and Europe note issues had boon increasing, despite stationary or falling prices and low trading activity. “ ‘‘lt appears that in many countlies, added the Professor, "confidence in banks is impaired, and that people are hoarding money, 'it is probable that this low level of confidence is the key to, the whole situation. The cause is not deflation, as many persons have suspected, for there is little evi dence of deflation anywhere. The level of confidence appears to b e extraordinarily low in every country and there seems to be no likelihood" of recovery until a greater measure of confidence is generated.”