Nelson Evening Mail MONDAY, JUNE 2, 1930 THE U.S. INDUSTRIAL PROBLEM

Nelson Evening Mail, Volume LXIV, 2 June 1930, Page 4

Nelson Evening Mail MONDAY, JUNE 2, 1930 THE U.S. INDUSTRIAL PROBLEM

WE in Now Zealand are liable to overlook the fact that the prevailing economic depression, which shows itself in the low prices of our primary products and unemployment, is characteristic of all, or nearly all, civilised countries. The industrial depression in Great Britain shows itself not only ill the unemployment. but in the drop in prices of raw materials, such for instance as wool, which to-day is fetching about half the pi ice obtainable a year ago. The situation is much the same in Germany, where the percentage of unemployment is high, and in nearly all the industrial countries of Europe. It has been cus-

tomary to attribute this economic depression to the. effects of the World War. But when it is seen that the United States of America are. suffering from industrial depression in an equal degree;, despite the fact that they possess the major part of the gold in the world, it is evident that the cause of this wellnigh universal commercial, industrial, and economic depression must he looked for in some other direction.

- 'The (list signs that all was not well in the United States exhibited themselves in January, 1929, when certain Professors of Economics, observing the falling off of production in the steel and cotton trades, warned the country against tile dangers of over-production. Among other things, they pointed out that the American market had practically reached saturation point, and that unless the industrial magnates and corporations, which had extended mass-production to its limits, were to reverse their policy and reduce production, serious results must inevitably follow. No one paid any attention to these heralds of ill tidings. The Stock Exchanges of New York and other great American cities went merrily on with their traffic in stocks and shares whoso prices tended to rise with every operation. In tho Autumn certain financial groups, holding largo interests in stocks and shares, and having their fingers on the pulse of tlie industrial market, came to the conclusion that the. dangers of over-produc-tion rendered tho holding of industrial shares and stocks precarious, and decided to sell out. This led to a feeling of uncertainty on the New York Exchange, where it was not long before other financial groups began to sell, with a consequent drop in prices and the spread of the panic to the members of tho public interested in stocks and shares, and the slump became general. The Reserve Banks came manfully to the rescue by reducing discount rates bv s per cent., and liquidated upwards of 84 million pounds sterling, with a view to easing tho money market and preventing a general decline of business. However, such means were quite inadequate to stave off the inevitable industrial slump (which was attributable to causes quite beyond the powers of ordinary finance to check), and the result was wholesale restriction of production and tho consequent alarming increase of unemployment. It was reported recently that the number of unemployed in tho United States bad reached something like five or six million people. And yet there is plenty of money in the country, Us is shown by the expenditure on luxuries. For instance, during the twelve months ending 31st December last, 50 million pounds sterling were expended by Americans upon works of art. It was only in December and January last that this traffic in valuable pictures showed signs of being affected by tho crash on the Stock Exchange. Such expenditure of private wealth, though it is ar. indication of the existence of money available for various purposes, including industrial enterprise, cannot seriously alleviate the economic situation, which is so gravely affected by the adverse state of markets at home and abroad. Though of course the home market (protected as it is by immensely high tariff-walls) will continue to absorb much of the country’s industrial output, it has ceased, for a time at least, to be an expanding market, while the foreign market appears to bo contracting to an alarming extent. It was reported from Washington, last week, that, judging by the returns' for the first quarter of the year, the exports of the United States are likely,to decrease by 240 million sterling during the current year. This fall in the foreign market is attributed to reprisals made on account of the recent raising of the U.S. tariff-wall, which again is attributable to the fact that the serious position of home industry demands the exclusion of' foreign importations. Tims a vicious circle is created, from which there seems no hope of escape.

Among the effects of industrialism in the United States, is the tendency of the small town and village to disappear. It is calculated that during the last ten years 1320 places of 2500 to 5000 population, and 12,905 incorporated places of less than 2500 people have become depopulated and have ceased to exist for census purposes. A rough calculation places the movement of tho rural population to the big towns and cities at 30 millions during the last ten years. Those people will be seriously affected by unemployment through the decline in industry. The outlook is grave. The limit of the home market has been reached. The tendency is for the foreign market to decline. Tho only present remedy appears to bo restriction of output, which necessarily connotes unemployment. It is a curious coincidence that the 6 million unemployed (involving five people in each family) bring the number of people immediately affected by the industrial depression to 30 million people, which is approximately tho number of people who have forsaken the rural districts for the industrial towns and cities.