THE TREND OF BUSINESS

Nelson Evening Mail, Volume LXIV, 18 September 1929, Page 2

THE TREND OF BUSINESS

IMPROVEMENT PREDICTED CONFIDENCE STILL LOW UNEMPLOYMENT A SYMPTOM PALLIATIVES DEPRECATED An improvement in business activity is forecasted in a bulletin prepared by tho department of economics of Canterbury College and issued by the Canterbury Chamber of Commerce, reviewing the trend of business in New Zealand. The authors consider thai, already a larger volume of business is being done (ban was the case a year ago. The report begins with a detailed analysis of overseas trade and banking statistics. Commenting on the. eha'nge in lh(i proportion of fixed and free deposits it remarks that the, figures reveal a very decided fall in business confidence since export prices fell about the end of 1925, and they suggest that a prime consideration of public policy at the present time. is the restoration of confidence.

MONETARY CONDITIONS

In a further review of the bank returns, allowance is made for seasonal variations, and from the modified results it is deduced that monetary conditions reached their peak about the end of last, year, and since then have undergono some recession. "There is nothing in tho overseas trade, figures to account for this recession," says the bulletin. "On tho contrary the trade balance, together with the recent increase in State borrowing abroad, should have brought further improvement in the banking figures. The fact that such improvement has not occurred supports the widely-held view that considerable sums of New Zealand money are sent outside the Dominion for investment, mainly in Australia, where investments are presumably more attractive to investors."

DIFFIDENCE OF INVESTORS The final conclusion of the investigation is that business generally has been definitely improving for a year or more, and is likely to continue to improve, unless it suffers some unusual check, until next summer at least. Then much will depend on tho coming season's export prices, which appear likely to be lower than in the past two years. At present money for investment is available in abundance, b ll t the abnormal proportion on fixed deposit shows that investors are extremely diffident of direct participation in business under present conditions. The level of business confidence may be higher than it was, but its recovery is extremely slow. If confidence could be fully restored, money might be expected to flow readily into business ventures, creating a demand for labour to absorb the unemployed, and raising business activity and prosperity to new levels. But unfortunately events have turned in directions more likely to retard than promote the growth of confidence. In the chief overseas countries where our exports are sold, high bank rates and credit contraction have ruled recently and prices have fallen in consequence. British wholesale prices are now about 35 per cent, above their 1913 level and about 20 per cent, below their level of 1924. Hence there is some apprehension that export prices may decline for New Zealand's coming export season.

ASSUMPTIONS PROVED UNTENABLE Meanwhile unemployment remains asa symptom of our economic disorganisation and we are now Hearing the end of our third winter of unemployment. The assumption that unemployment is due to immigration is now less tenable than ever, for immigration has been negligible for the past two years; nor can it be imputed to the depression of 1920-27, for the causes that occasioned that depression have long given way to events which should make for prosperity. Much money has been spent on pallialives, but the real cause, the fact that costs of production are too high in. relation to produce prices, has neither been frankly faced nor met by the country as a whole. Business conditions have undoubtedly improved appreciably during the past year, and they appear likely to improve further during the summer/but until the fundamental causes of our difficulties are attacked and removed, full and permanent recovery cannot be expected.