LEGACIES OF WAR

New Zealand Herald, Volume LXXIII, Issue 22466, 9 July 1936, Page 15

LEGACIES OF WAR

THE ECONOMIC CRISIS * DISRUPTION OF OLD SYSTEM TRADE AND CURRENCY BARRIERS "In spite of apparent defeat and in the face of subversive economic policies on every side, we must base our action 011 better expectations and believe—what is the truth—that the prosperity and happiness of ouc country promotes that of others, that the solidarity of man is not a fiction, and that nations can still afford to treat other nations as fellow creatures." Thit. is how Mr. H. R. Rodwell, acting-pro-fessor of economics at Auckland University College, summed up an address entitled "From the Peace Treaties to the Economic Crisis," given to students and members of the public last night. The war and the peace treaties, said Mr. Rodwell, introduced profound changes, the most obvious being the disruption of tho political economic relationships between the two groups of belligerent Powers. The failure to recreate the conditions favourable to a resumption of international co-operation on a scale at least commensurate with that existing before 1914 was a disastrous mistake. From the most spectacular change—the alteration of the map of Europe and the transfer of the colonial territories of the conqured Powers to the victors—a restoration of that measure of international trade upon which the life of Europe depended before the war was botli directly and indirectly hampered. The loss of organisation and economic efficiency resulting from the partition of the empires of Germany, Austro-Hun-garv, Russia and Turkey among somo 20 independent State? was incalculable. Trade Restrictions New political frontiers became economic frontiers and the new countries attempted to make themselves selfsufficient in order to build up their newindustries. They raised tariffs and adopted other methods'of trade restriction. The volume of international trade fell away and additional productive equipment was brought into existence, the result being a fall in imports and an unfavourable reaction upon the great exporting countries, -whose own productive equipment had been increased. The currency systems of the world were also disorganised. Price levels and exchange rates fluctuated wildly and such instability was a very serious handicap to the resumption of normal trading relationships. By 1928, however, the disturbing influence had been in a large measure removed and another step had been taken toward the resumption of normal conditions. Capital movements were affected, too, those nations which had been the lending nations, with their manufacturing industries adapted to these conditions, having their foreign investments reduced. Industries depending upon the export of capital were severely depressed. Lending was resumed after 1924 and increasingly after 1925 for developing industrial enterprise m Europe. This resumption helped the ! lending countries toward a fuller utilisaj tion of their plant, but it also hastened j the growth of the new plant in the j new countries of Europe, this later resulting in an intensification of'the selfsufficient policies of these countries. National Spirit Inflamed

From 1920 to 192g, liawever, sonic progress hail boon made toward resolving the difficulties that lay in the way of recovery in Europe, but the situation was far from satisfactory. The rapid fall in prices beginning in 1929 was followed by a rapid growth of restrictive economic policies in every country, new forms of trade restriction.-' being invented and applied. Analysing the less tangible effects of the peace settlements, Mr. Rodwell said the placing of the conquered nations iti a position of inferiority and the subsequent disregard of these nations' natural desire for equality was responsible for the defeat of the disarmament agreements and for the new ordein Germany. It had inflamed the national sentiment in all countries and had led to economic measures to produce self-sufficiency, in order to be strong in the event of war. " In 19.'36 we arc beginning to realise that the failure to ensure economic and social equilibrium was the fatal flaw of the peace settlement," ho said. " Now we are dimly aware that territorial claims and armament programmes arc not the causes of our present discontents, but the symptoms. The root cause is to be found in the actual or threatened impoverishment, declining standards of living, and insecurity for the future. " The abolition of trade restrictions, the distribution of raw materials, tho stabilisation of currencies, the resumption of international lending—these are the matters which must engage the attention not only of our representatives but also of each of us," said Mr. Rodwell. " These are the matters which are not only essential to the promotion of economic recovery, but are indispensable to the future stability of the whole political structure." '