ARTIFICIAL PRICE RAISING.

Manawatu Standard, Volume LVI, Issue 112, 13 April 1936, Page 6

ARTIFICIAL PRICE RAISING.

The price problem of raw materials has been'for five years past one of the most weighty ot all international economic problems. Since 1929 the prices of raw materials have been very loav, and in most markets they have at times touched record depths. In 1933 and 1934 there were important upAvard trends, but we are still far from complete recovery, and recovery is often interrupted by fresh relapses, which undermine again the increased confidence Avhich has been gained. This is in sharp contrast to all earlier international crises, and is without doubt due in some degree to the various devaluations (last year Belgium devalued the belga, and China abandoned silver), to foreign exchange troubles and to various other difficulties of international exchange, Avith which the earlier great Avorld economic crises either did not have t.o contend at all, or else to a Very small extent only. The great fall in prices took place in 1930, when there Avere us yet uo currency, and only limited other difficulties, and it is obvious that the real crux of the position lies deeper. The real and final cause of the crisis in raw material is traceable to the great upheavals in international raAv material econo • mies during the war, when economic relations betAveen the countries fighting in opposite camps were completely severed, and trade between the Allied and neutral countries was badly dis located.. One consequence Avas that in all overseas countries there was a great expansion of production capacity, which had not only to cover the falling off in deliveries from the countries engaged in the war but had also to provide for their insatiable Avar requirements. So long as the demand for raw materials persisted the dislocation did not cause any arrest of development. A-s soon as the war demand ceased the productive capacity which Avas necessary to satisfy the abnormal demands of Avar proved far too great for the normal requirements of international industry in peace time, the more so as the combatant countries began to try to regain the- positions that they had held before. The struggle betAA-een the old and the neAv iuav material producing areas for possession of the market laid its seal on raAv material development during the past fifteen years. In the attempt to survive this struggle each individual producer wished to produce more cheaply than his; competitor in order to assure himself of the greatest possible share of the curtailed market. There have been other developments the results of Avhich have been that the producing capacity of the Avorld in practically all industrial raAv materials is tAyice as large, and even more than in preWar days. The prices of tuav materials and certain foodstuffs, today, cannot be measured by preWar price levels, the new price level basis lies much beloAv that of pre-War times, and this is AA'liat governments seem unwilling to recognise. Artificial price raising through. subsidies, bounties and what not cannot alter this fact. Producers 'everywhere of raAv materials and foodstuff's for export have yet to face the changed situation.