WORLD CONDITIONS

Nelson Evening Mail, Volume LXX, 14 September 1936, Page 8

WORLD CONDITIONS

AS THEY AFFECT BUSINESS TWO BASIC PROBLEMS ADDRESS TO LONDON CHAMBER OF COMMERCE . At the annual meeting of the Lorn don Chamber of Commerce held in the Council room, Sir Stephen Demetriadi, K.B.E. (retiring President) was unanimously re-elected for , a third year of office, In his presidential address Sir Stephen reviewed the present state of international affairs, and the Chairman of the Council, Colonel A. C. Davis, J.P., presented a survey of the Chamber’s work during 1935. Mr Harry Atmore, M.P., forwards an extract from the London Chamber of Commerce Journal, giving the presidential address as follows: — INTERNATIONAL CONDITIONS Sir Stephen Demetriadi, K.B.E. said:— It is the custom for the president, at

the annual meeting, to review world conditions as they affect business. No trader can, I think,' suggest that the present state of international affairs is anything but extremely disquieting. Political disturbances have their roots in economic distress. Nations which are unable to distribute purchasing power to their pebple through wages, will frequently be driven to external adventures as the only alternative to internal disorder. This, in many cases, is the underlying reason for external adventures by nations, and not the need for an outlet for population nor the acquisition, of supplies of raw material,' which are the reasons usually giveri. Our own colonial history shows that after many decades of development, the most that can be expected in tropical and semi-tropical colonies; is to have settled a few tens of thousands of Europeans, so that colonial conquest cannot seriously be regarded as providing an outlet for the populations of overcrowded European nations. (Hear, hear.)

So far as raw materials are concerned, they are in abundance. The raw material producing countries have the greatest difficulty in finding buyers and are very ready to sell to any country which is capable of paying them. Countries can, of course, only pay for imports with exports, and whilst people in the raw material countries would be very pleased to receive, in exchange for their raw materials, manufactured goods, they are unable to do so as they have not internally sufficient purchasing power to buy the imported manufactured goods to which they are entitled, and, in addition, to buy their own retained production. TWO BASIS PROBLEMS There are two basic problems which face the,world to-day. The first is to distribute purchasing: power to men who are constantly displaced by machines. As men cease to earn wages, they become unable to consume, so that the machines which have displaced them will also presently cease to work, because goods are not for long produced if people have not the money to buy them. It is a vicious circle: machines stop men working and, because men have stopped working the machines themselves have to be stopped, since men no longer have the wages with which to buy the product of • , the machine. (Hear, hear.)

; ' The second problem is an international one. In years, gone by the advanced Western nations were able to compete with the East because they had better machinery, and better transport, . and hereditary, skill in workmanship was still an important factor. We have now equipped some of the Eastern nations, and are rapidly equipping others, with modern machinery and transport. Over an everincreasing range of goods, mechanical, improvements are rendering human skill .a- diminishing important factor.. The time is not far distant—if it has ' not already arrived—when in many. industries, competitive ability between \ nations will depend upon wages hours and- conditions of labour. On that basis the advanced Western nations are at a great disadvantage when they come to compete with the East:, / r - . ■ .; ' ADOPTION OF NEW METHODS These two factors in combination, are so novel and affect so fundamentally the whole economic and, therefore, social and political structure of the'world, that .they demand drastic revision of i old ideas the adoption of'new'' methods to rheet them. This country, with those nations which

follow sterling, has in its wisdom al- ' ready moved a long way from the old paths—(hear, hear) —and if we look across the Channel to-day, we cannot fail to be impressed with the very unsatisfactory conditions to which those countries have been reduced which have clung tenaciously to an old-fashioned system and have applied rigourously its tenets. That system has demanded in those countries persistent deflation, a necessity from which we escaped .when we abandoned the Gold Standard in 1931. With your permission gentlemen, I am going to read you a significant passage from the Report of the Macmillan Committee which was published in June, 1931: “A study of history would, we believe, confirm the opinion that it is in the changes in the level of prices, and in the consequential alteration in the position of debtors and creditors, entrepreneurs and workers, peasants and the tax gatherer, that the main secret of social trouble is to be found. Looked at from this point of view the events of the last decade are of the most extraordinary kind. A very violent depreciation of money was sufficient in the immediate post war period to destroy over a large part of the continent of Europe all rational economic calculation and all orderly social and economic development. This violent movement was followed in turn by a period of relative stability in which material well-being progressed markedly. This phase has now been followed by a violent down-turn of prices the effects of which upon political and social stability have already been very great. The problems thus raised transcend in importance any others of our time and generation, and we have regarded it as our main task to expound their significance, and to bring forward suggestions for their solution.” STABLE PRICE LEVEL This Chamber recognised in 1932 the predominant importance of a stable internal general price level. Since the abandonment by this country of the Gold Standard is Septem- : ber, 1931, the index figures for wholesale and retail prices, and cost of liv- ; ing, have remained remarkably stable and a substantial improvement in internal trade has followed. '•

I : am convinced that it is within the power of this country still to lead the world into calm waters. (Hear, hear.) We alone, of all the great nations, can rely upon being followed in whatever economic course we may decide upon, by a very substantial percentage of .the trading nations of the world. We. are their greatest market and we command their confidence. Our institutions, whilst they are remarkably adapted in outward form are,'in their application, more readily adapted to changing conditions than those of any other country in the world. Through the stability of our institutions, we have acquired a reputation for being the most conservative people on earth, whereas, in fact, we are probably the most—l won’t say revolutionary, but—evolutionary. (Hear, hear). Many changes have already taken place, unnoticed by many of us, in British thought and practice during these critical years. ,

We have put our hand to the plough: let us not look back. Let us open-eyed, recognise the facts of the new world, courageously adjust old methods to the new conditions, under the same able leadership; and we shall yet avert disaster and be instrumental in leading the nations into the paths of peace and prosperity. (Applause).