TRADE DURING DEPRESSION

Nelson Evening Mail, Volume LXIV, 5 August 1931, Page 7

TRADE DURING DEPRESSION

SOME COMPARISONS An examination of foreign trade statistics was mado recently by the London “Financial News.” Comparisons showed that tho trade of France in the first five months of 1931 had declined less than that of the United States, Britain and Germany. This was explained by the fact that on the one hand, exports from France arc mainly of goods for current consumption (whereas British exports, for instance, arc largely “capital" goods); on the other hand, the standard of consumption in France being low does not allow much margin for reduction, so that imports are maintained. “The United States has met the decrease in its current income by an equal decrease in current consumption; while Germany has taken the, same course exaggerated by the abstinence demanded by the reparations position,” tho “News” continued. “This country, on the other band, has clearly met tho decrease in incomo by charging it, so far as foreign trade is concerned, against the foreign balance, although the considerable amount of fixed income receivable from abroad has doubtless assisted in the maintenance of the level of imports. The root cause is, naturally, the relatively high level of wages paid in this country, together with the substantial income transferred to the unemployed from the rest of the community. The bulk of the exiguous unspent surplus of the national income has been steadily transferred to pockets whence it is likely to issue in immediate current expenditure. To maintain a semblance of activity by thus sustaining current consumption is certainly a palliative of a sort, and it is not easy to see in round figures the deep lying dissipation of national savings which it entails; but, when (be effects are scon in the foreign trade balance, its destructive effect on the increment of national wealth becomes more apparent.”

THE VOLUME OF CONSUMPTION There is evidence in the maintenance of the full volume of exports from New Zealand that the actual consumption of goods has not been seriously reduced. This point was also emphasised by the “Financial News,K which directed attention to an address delivered at the International Colton. Congress in Paris by Mr Alston IT. Garsidc, the economist of the New York Colton Exchange, who declared that tho magnitude of the slump in prices was not reflected in tho volume of consumption.* He slated that the ultimate world consumption of cotton goods during tho current depression may have been reduced by 4 or 6 per cent.; or it may even have been reduced by 7 c-r 9 per cent. But “it is obvious that during the past year and a-half of business stagnation the world h-s used a quantity of cotton goods which Is astonishingly dose to its maximum consumption before the depression.” All that the world depression has dono is “to retard the long-term expansion in world consumption of cotton goods,” and when demand and world buying power arc back to normal “new high records in cotton goods consumption will bo set up.” The fault lies not In the stars, but in Lancashire and in New England. The total consumption of cotton goods has been practically unchanged; but tho new branches of the industry have increased their share at the expenses of the older branches. India, Japan and China have challenged Lancashire’s leadership; and tho Southern States of America have stepped into the shoes of New England.