PRODUCE AND PRICES

Hokitika Guardian, 9 August 1921, Page 3

PRODUCE AND PRICES

j THE GREAT INFLATION. » A COMMERCIAL VIEW. J WELLINGTON, Aug. 0 .Aspects of produce prices, including the inflation phase, were touched on at the annual meeting of the Wellington Chamber of Commerce vesterdav bv Mr i •■ , • M. A. Carr. "The produce of the Dominion,’’ lie said, "is sold in the world’s 1 markets at world's parity prices. If ’ there be trade depression, or financial 1 stringency, in our principal markets it 1 is inevitable that the condition of affairs is sooner or later reflected oil New Zealand’s trade. It will not, therefore, he out of place if I give a brief sketch of trading conditions as they obtained in the Old World. REASONS FOR INFLATED PRICES. "Looking back it is not difficult to trace the reason for the 'tremendous inflation of prices. In al! the belligerent countries large numbers of men were called a way from their peaceful occupations to take up military duties. A considerable proportion of I hose who were left were engaged in the production of war material at constantly incrca'sing rat.es of wages. This, in turn, bad its effect upon the whole labour market, and commodities required lor civilian use could only be iiianulaeturod at greatly enhanced costs. The armistice in November. 1918, saw the world bare of commodities required for everyday use. "I here was a temporary lull for a few months owing to the uncertainty of the likely trend ol trading. but, instead of prices receding hi any way. they progressed in leaps and bounds. Il has been estimated that in tlm year 1919 prices were raised almost 10 per cent. So gnat was tlie demand for goods that the question of price or cost ot production was ;in inconsiderable factor. ( oiisumers were clamouring for deliveries almost at any price. "Karlv ill 1920 a radical change took place in trading conditions in the United Kingdom. The Home market bad Ihhmi supplied: the Conlinciita! countries were not in a position to pitichase except for the barest necessities, and till that was left were the overseas markets, and the requirements of these markets were fulfilled in a lew short months 4 iie result was a world-wide decline in prices, financial stringency and enforced cur- j tailmcn; ol production and consequent unemployment. A MOMENTOUS QUESTION. "The question that, is foremost in our minds is, when is the position likely to light itself:' Before it is possible to form an opinion upon this question it is necessarv to examine the economic condition of the principal countries ol the world, if there is one tiling more than another that has been brought lmine to the commercial community it is the inter-dependence of nations upon one another." If. for any reason, the eapacitv for production and consumption of any nation, or any group of nations, . is seriously impaired, that position is j inevitably reflected in the trade ot j other nations. Until the distressed , countries of Europe are placed in a ( better position financially, and show t signs of recovery from their economic paralysis, it would appear that any rerival of world’s trade must be slow in- J t deed. Before the war il was estimated j , that 111 per cent of Britain’s export trade was with the continent of j Europe. Consider the position of (| Europe to-day. Many of the countries s have seriously depreciated currencies, y mid their industrial condition is in a deplorable state. ~ HIGH RATES OF EXCHANGE. u In a report which came to my notice recently, figures were given showing the difficulty of Britain doing business with the continent of Europe in view of tin high rates of exchange which the foreign importer lias to pay for 6 sterling- For goods imported from Great Britain, the French customer has to pay lor 61 sterling the equivalent of 62 3s 2(1 in francs, the Italian custurner the equivalent of 64 3s id in lire, the Belgium customer the equivalent ol 62 Is in francs, the German customer the equivalent ol -, I 13s -Id in inaiks, jj nd the Austrian customer the cquiva- ° lent of 672 18s Id in kroner. '' CREDIT SCHEMES. "Various credit schemes have been | promulgated to assist ill the restoration j (l of trade between the different countries i * in the direction of enabling traders to I obtain credits to finance necessary mi- j 1 ports. The principal of those are the s Ter Me tile n credit scheme (so named | " after an Amsterdam banker) and the ■ ( Mountain scheme. The Ter Meulen n scheme proposes to provide a special 1 f. rm of security so that an exporter h may be sure of payment when supply- c ing merchandise to an impoverished conn try on credit. * "It proposes that an international , commission lie cteated to aiiministei l certain assets which the Governments i: are to pledge with a view to obtaining, r imports oil credit for themselves or for j their nationals. The Government would v lease issue bonds which would ho conn- s ter.-igned by the International Com- 1 mission, and these bunds would he used ,• to reinforce the credit of importers, r As an exporter acquiring these bonds t might wish to borrow on them, it was v proposed that a syn.lictae be formed of Government, insurance companies f and bankers to guarantee them. The v dill'eiilties, however, facing these pro- !: nasals are not so much economic as s political, as many of the States ol s Europe are still in an unsettled con- e Jit ion.” 1