ECONOMIC OUTLOOK.

New Zealand Herald, Volume LXVII, Issue 20538, 12 April 1930, Page 15

ECONOMIC OUTLOOK.

INFLUENCE OF AUSTRALIA.

EFFECT OF TARIFF CHANGES.

PROFESSOR TOCKER'S OPINION

[nY TELEGKArft. —OWN COn RERI'ONPENT.]

CIIRISTCIIUHCH. Friday,

In an explanation of tho exact business relationship of Australia, New Zealand and England, and in interpreting Australia's present unfavourable position, tho professor of economics at Canterbury College, Professor A. H. Tockcr, in a luncheon address before tho Canterbury Advertising Club yesterday, predicted a poor year in No\v Zealand in 1950, followed by two years of gradual recovery. "Wo aro not responsible for what is occurring in Australia," said Professor Tocker, "but wo aro closely linked with her and wo cannot help being profoundly affected by tho change that affects her. Sho is by far tho bigger country, and wo aro inevitably affected more by her than sho would bo by us."

Many details about Australian banking tariffs had not been published. Referring to tho tariff, ho said that the raising of tho oxchango rate to 6 per cent, meant a 6 per cent, premium on goods from overseas, which ought to be effective if cortain imports wero prohibited and high tariffs put on others. Business men would assume that these changes wero permanent, and they would make permanent plans to make tho goods in Australia. In time, however, tho tariff might come down, and they would then be. left high and dry. Tho tariffs must ultimately bo brought down, or Australia would bo permanently saddled with expensive production. Financial Conditions Abroad. Personally, Professor Tockcr said ho did not think that tho rest of the world would approve of Australia's action in raising tariffs. Throughout tho world to-day there was a good deal of depression following tho Stock Exchange collapse in tho United States, similar to tho depression which followed the Knickerbocker Trust collapse in 1907. Professor Tockcr quoted from an English financial authority, which stated that tho depression was shown in the United Kingdom in reduced exports of manufactures, and in a more than seasonal increase in unemployment. In very many industries tho difficulties were increased and recovery postponed by the renewed fall in commodity prices. The troubles in overseas markets had become more acute, and difficulties were arising in tho financing of exports. Another adverse factor was the continual stagnation in international lending. With theso developments it was not practicable to suggest a date by which improvement would bo realised. Business Activities Decline. "They can sco as yet no evidence of recovery, no evidence that prices havo yot touched bottom," commented tho professor. "England fears that low prices for raw material will lessen the purchasing power of tho big body of consumers which buys her manufactures, and until that purchasing power recovers sho cannot pay moro for tho raw material." 110 quoted then a forecast from Harvard, America, stating that business activity had continued to decline, although some recovery had been shown in January. Further improvements would bo made easier by tho lower bank rates in America and abroad, which would operate also to stabilise commodity prices. Thero was some improvement in unemployment, which, it was stated, would be alleviated by seasonal activity. "There is nothing particularly optimistic in thoso reports," added Professor Tocker, "and optimism or pessimism in New Zealand depends on optimism or pessimism in countries like these. Until export prices recover thero is not much chance of recovery unless costs of production are reduced, which is not likely." He predicted a low level this year, - a slight recovery next year, and a fairly good year in 1932. "This is not pessimism, but an attempt to interpret facts," tlio professor reminded his audience.