WELLINGTON NEWS

Hokitika Guardian, 23 March 1931, Page 2

WELLINGTON NEWS

A BARTER CRISIS. (Special Correspondent.) WELLINGTON, Marcji 18. The Chairman of the Westminister Bank, the Hon. Hu pert Beckett in clUalrag with world economic conditions in his address to the shareholders at the annual meeting declared that the maldistribution of gold Jmd been overstressed and in his opinion the world was passing through, not so much a. gold crisis, nor yet a credit crisis, but what he termed a “barter” crisis. Production has been outrunning consumptiin, not only in basis commodities, but also in inanufacured goods. • Efforts directed towards the artificial restriction of output, and the .maintenance of prices of many commodities have met with failure, which has caused the disorganisation, panic '■.selling, and further price collapse. The catastrophic decline in the pric e of silver has impoverished the teeming millions of eastern countries, whose prosperity had already been reduced by political upheavals. The majority of the population of the world aie producers of the primary coinmoditd'es—foodstuffs, mntefials, mineral, animal products stlcli Us Wool, fthd vegetable products such its Cotton trad rubber. International Trade is fail*, dameutttlly an interchange of raw materials and manufactures. The quantity of manufactured goods which the primary producing countries are able to take from the manufacturing countries must depend upon the relative cheapness or dearness of the two chases of goods. Between the raw material and the finished product there are many processes, and production of all kinds accumulate when a violent fall occurs in the value of the raw material, because the intermediate costs cannot be reduced simultaneously, their weight becomes disproportinatc, and the price of the finished product is thrown completely out ol harmony with that of the basic constituent.

The primary producer is thus unable to take in exchange as large a quantity of manufactured goods as that to which he has been accustomed—to the impoverishment of himself and the manufacturer alike.” The foreign trade of Great Britain is larger in proportion to the total than the foreign trade of any other country, and it consists in the main or an exchange of manufactured goods for foodstuffs, and raw materials. There is here a disruption of values, and -L- Professor Henry Clay, for many years Professor of Economies in the Univerof Manchester, expressed hiinfefe self 0 n the situation as follows: fed “The average of the prices we pay C for our imports is now otily 18 per tefe cant above the pre-war level * the ave* rngy price we get for our exports is jfedj still 51.3 per cent above the pre-war level. Part of the difference is accounted for by the higher average quality of our exports, but m the *££4 main if means thaf we are expecting jfehj; to get. .more for what w e supply the feiii for what we take from the rest of 33) the world.” Professor Clay declarfr} : tihat the discrepancies were evidevco both of dislocation and failure ✓rfe to adjust our costs to world price lev- !§§ els The same discrepancies nr e observable in New Zealand though on a j£fe much smaller scale, and it is to assist fed in the adjustment of costs so as to fen; bring about an equilibrium between •fef the primary and secondary industries, that the Government has suggested that the Arbitration Court should he fes given the power to review awards, fey and make such adjustments as ffe the economic ‘ conditions warrant, fe.” There is no attack on the standard of living for award wages are higher than jv the cost of living index figures wari,; '■* rant.

If the intermediate costs in the secondary industries are reduced, the cost of living will recede further. The wage problem is not a political connundrum, hut an actual economic problem, and economics, unlike politics admit of no compromise. Costs in the secondary and sheltered industries must be reduced, that is demanded by the world economic situation today, and the demand must be met. No doubt the barter crisis is aggravated by prohibitive tariffs espoused by many countries, but that in an aspect of the situation that is not likely to endure for all time.