The New Zealand Times. MONDAY, MARCH 20, 1922. WORLD ECONOMICS

New Zealand Times, Volume XLIX, Issue 11163, 20 March 1922, Page 4

The New Zealand Times. MONDAY, MARCH 20, 1922. WORLD ECONOMICS

Signs of improvement in world economic conditions are shown by some interesting facts and figures quoted by a New York financial journal recently to hand. The point is stressed that thero is no royal road to prosperity, whether individual, national, or world-wide; and the lesson is enforced that only by strict economy and by greatlyincreased production can the world win back to stable conditions of trade and industry. It was natural, it is pointed out, that, under the circumstances following the end of the war, search should be made for panaceas for the economic and financial ills of the world. The search for cures for inflation, for disturbed trade, and for like economic diseases, is still, of course, being diligently prosecuted; and out of all this effort has come a greater understanding of world economic problems, which ie in itself a clear gain. “But,” we are told, “to many minds the conclusion has become irresistible that the search for a panacea —for a specific which will make the world prosperous—is certain to result in disappointment. Examination of some of tho most intelligent and earneet of the recommendations for bettering world conditions, only reinforces the belief that the desired reconstruction and stability cannot be brought about by any formula.’’ That is to say, “there is no magic key to the gateway of prosperity.” But, even if that be admitted, it does not by any means necessarily follow that the situation is hopeless. On the contrary, we are assured, the most hopeful feature of the present position is that, without panaceas, some of the nations which suffered most as a result of the war are already proving that they can,, if given time, rehabilitate themselves, and are already, making real progress in that direction. Among the essentials to the creation of economic equilibrium are enumerated political stability, the reduction of waste in government, the sealing down of arrhaments—happily rendered possible on a large scale, so far as the navies of the world are concerned, by the Washington Conference —the cessation of currency inflation, the balancing of Budget's, and the elimination of abnormally unfavourable trade balances. Among the first steps necessary for economic restoration are the reduction of national expenditure and the balancing of national Budgets. This, it is claimed, has been apparent for some time past; and “as a result economy has become the keynote of national policy everywhere”; while the statistics in regard to tho outstanding currency and note issues of various nations and their foreign trade give evidence of progress in other directions.

A marked reduction in the note circulation of many European countries during the past year is shown by the following figures: —Denmark, decrease in note circulation, 13.6 per cent.; Norway, 13.6 per cent.; Sweden, 11.6 per cent.; Italy, 8.1 per cent.; Netherlands, 6.6 per cent, bank-notes, 18.4 per cent. State notes; "United King-, dom, 6.2 per cent. Bank of England notes, 14.7 per cent. State notes; Bulgaria, 6.7 per cont. bank-notes, 9 per cent. State notes; Switzerland, 5.2 per cent.; France, 2 per cent.} Spain, 1.8 per cent.; Belgium, .8 per cent. During the war France had increased her noto issue from 6714 million francs to 428,000 millions; Italy had inflated her currency from 2782 million lira to 22,000 millions; and Britain had increased her bank-not© circulation from 30 millions sterling to 481 millions. There is still, therefore, an enormous amount of inflation; but the fact remains, and it is a very encouraging fact, that there is at long last a distinct tendency towards a reduction. Germany, Poland, and Austria, however, are still greatly inflating their currencies; and further inflation ha 9 also been indulged in during the past

year by Hungary, Koumauia, Jugoslavia, and Greece. In spite of the fact that international trade conditions are still much disturbed, a number of European countries, it is pointed out, have during the past year narrowed down the margin between exports and imports, thus showiiTlf a trend towards a more normal and nealthy balance of trade. France had reduced her note circulation by 2 per cent, only; but, in regard to trade, her accomplishment is accounted as “little less than miraculous.” Up to October last, for instance, France had actually transformed an enormous adverse trade balance into an excess of exports over imports, although in the years before the war, like most European countries, she always had an adverse visible trade balance which was offset by income from investments and services. Even with her unfavourable trade balances in September and October last, the excess of exports over imports for the first ten months of the year was some 400 million francs. The United Kingdom, Italy, Spain, and Switzerland increased their unfavourable trade balances in 1921; but, in addition to the case of France above-stated, the excess of imports over exports was reduced as follows :

Denmark (3 1920. 1921. months) ... 87 per cent. 5 per cent Sweden (8 months) ... 55 per cent. 22 per cent. Belgium (6 months) ... 41 per cent. 24 per cent. Finland (8 months) ... 62 per cent. 56 per cent. Netherlands (9* months) ... 96 per cent.' 62 per cent.

In each case the comparison had to be made for a shorter period than twelve- months, because the latest statistics available for 1921 covered only from six to eight or nine months, as the cane might be.

AH of this evidence and: more that might be' Cited’ as to industrial improvement in Europe goes to show (it is stated) that, without any artificial stimulant or international plan, real progress is being made in repairing the world’s economic structure. The results achieved have been brought about by hard work and tried-out. methods, and encourage the belief that, even if the search for a world-cure should continue to he without result, normalcy may nevertheless be achieved. A distinguished English statesman describes his country as being “engaged in a steady, remorseless maroh towards financial sanity. ’ It is in this spirit that the world has already set out on the long road to prosperity.

The conclusion of the whole matter, in fact, is that wo must not look to panaceas or cure-alls for our economic salvation, hut must put our trust, individually and as nations, in those oldfashioned but well-proved virtues, thrift and industry.