DISTURBING FACTORS

New Zealand Times, Volume L, Issue 11654, 19 October 1923, Page 2

DISTURBING FACTORS

WHAT’S WRONG WITH TRADE ADDHESS BY H.M. TRADE COMMISSIONER. '‘LACK OF CONFIDENCE.” At the “Y" Club lunch, held at tho Y..M.C.A. yesterday. Councillor (loudie presiding, an interesting and ; tliouatht-provokitiK address was given •)>v the British Trade Commissioner (Mr IN. F.lmslic) on ‘‘AVhat is Wrong with iTradoy’’ Mr Klmslic, vlir. was received with j applause, said that it was exceedingly : difficult to compress such an all-embrne- ! ing subject within the limits ol a brief iaddrca?. He would, therefore, have to Ideal in generalities only. Very few ; people realised how extremely modern a development was what we now- understood as international trade. Throughout ihe history of the world, of course, trade had existed in one form or an-

other; but up to r|iiitc modern times, trade between nations had consisted mainly of barter, and was principally in luxury articles, not in the necessaries of life. Fp to very recently every nation had provided its own food, clothing, housing, and other necessaries of The only important exception to that being a iatc period in the history of tho "Roman Empire, when tho idle populace of Rome was fed on imported corn. STEAM ENGINE CREATED TRADE. No trade, in the form in which we understood it to-dav, existed previous to the Napoleonic wars ; and if „we considcied the facts of the case, it was obvious it could not have done so. liecauso it wao, for instance, so much cheaper to grow food m one's own country than to move it over very long distances. So that trade, m the modern sense, did not begin until the steam engine e.amti largely into use on railways and in steamships; and that, did not so back beyond 1840. England then had a population of about 14 millions, .which supported itself on home-grown food. England took about 25 years to get over the effects of the Najwileonio war-.; and her trade did not really begin to expand until the Corn Laws and other trade restrictions were remov ed round. !nhout 1840; the great trade exhibition lin IRSI. an Hyde Park, was the first ever hold in the history of tho world. From then on, however. England*trade grow rapidly. England started producing manufactured goods for other countries, and for a long time she had no competitors. Germany did not exist, America was only developing, and' Japan was unknown. Germany did not start manufacturing until she had ended a long series of wars, and the German Empire was consolidated. It was not, in fact, until after tho Franco-German AVar of 1870 that she entered into international trade; and she did not become a serious factor in it cntil 1800. America also came to the front about, then ; but Japan did not do so until about 1000. EFFECTS OF WORLD AVAR •

So chat serious international rivalry in trade did not exist tilL the period Iron 1880 up to the outbreak of the World War. During that period trade grew rapidly, and it did not occur to anybody on what slight, perishable factors it" was based. The essential factors ior international trade were: (1) That communication must- be rapid, cheap. and easy: (2) financial stability; and (o) and. to his mind, the most important, confidence. (Applause.) The effects of the Great War on trade wore that shipping was diverted and the railways were used largely for war purposes: and the people of New Zealand suddenly realised how dependent they were upon their sen communications. The big banks of the world had been gradually formed into groups, and they financed trade. That was a very important matter; because between the production of goods and the final payment for them a year often intervened, and it was the big financial institutions which carried the burden till payment was made. During the war some 50,000 millions sterling worth of wealth was blown away and wasted; and the financing of trade was thus very seriously affected. But tho factors of finance and communications were fairly easily restored. After the war, shipping was restored within eighteen months; and finance was pretty easily arranged, as we could see in the case of a bankrupt country like Austria, whore the League of Nations took control of the situation, with the result that Austria was rapidly recovering. (Applause.) EFFECTS OF LACK OF CONFIDENCE. It was the lack of the third factor confidence—that was hindering trade now. (Applause.) l't was (juite impossible to carry on trade while confidence was lacking, and price stability was not attained. Just look at the effect of the Ruhr trouble on the iron trade, for example. At the beginning of this year the price ot iron was down fo about £5 a ton; but when tho ironworks of Lorraine and the Ruhr were shut down, iron rose in a comparatively few weeks to 150 s a ton, and it had since fallen to about 120. How could one trade under such conditions? The distributors naturally refused to buy forward, for lear of incurring huge losses. For the Inst two years, therefore. the world had been buying from hand to mouth; and manufacturers dared not turn out any great quantity of stock. So that, until we could restore confidence, we could not get trade restored. HOW N.Z. IS HiT. .Anoiher extremely imjwrtaut factor. and one, lie thought, that was: going to affect New Zealand very gieatly, was the wide differences in price between different grades U goods. Owing to the great demand during the war, the facilities foi production wore greatly increased, prices did not then count, and the norma! levels of prices were completely upset. Many articles soared tn artificial values; others became a drug in the market: and at the end of tho war the production ol wide classes of law materials end manufactures had been cronnoiiply increased, while other manufactures iiad been thrown completely out of gear When the civil demand followed the war demand, t was found that these price levels would nob suit, and there, had to ho a period of readjustment. The level of Lhcprlccx of raw materials and foodstuffs went buck to normal more quickly than those of manufactured good.-; so that ] i iocs got quite out of gear. Take tho case of the Federated Malay States. Rubber was being produced far in advance of civil requirements, and tile .same applied. 1o tin, ,So tiiat prices fell to a disastrous extent. The result was that ihe- Federated ' Malay States, when they wanted loeo- ; motives, for instance, had to pay four times as much in rubber for a. locomotive as in pre-war days. There lore, tbev could not alfoul to buy. That position affix led the whole world, and it. had not been got over to-day. Manufactured goods were still on tho

average 100 per cent, above pre-war i pikes, and Hint was what was hitting tlm producers of this country, whoso I products had conic down towards the I pro-war figure. The wheat-grower m • 1 America was bit in the same way : with ■ ' v. heat down to 80 cents a bushel, and machinerv. etc.. 100 per cent, above pre-war level, the farmer, therefore, could not buy machinery, and was becoming bankrupt. PRK .I?<4 Ml'sl BE PROPORTIONATE.

I'ntii -we got back to proportionate price.-* between foodstuffs and m’.v vna. ici ials ui the one iiand ami manufactured goods on the other, this could rot he righte d ; the wo. Id ccuid never get back to safe trade, and it could not get hack to the pre-war volume of its trade. World trade was still 30 per cent, below its pre-war volume, and that v. ns hitting New Zealand very directly. BEEP AND BETTER—A 4VAUNING. ; Take href. The world wae now (•inducing more beef than it could conmime; with the resuJt that prices were down to a level at which it did not j«ay to produce- beef. And there was, in hi* opinion, a distinct danger of the same thing happening in regard to butter and dairy produce generally. Great Britain was our one great market for these tilings : and she getting back her old sources of supply— Denmark, Russia, Siberia, etc. New Zealand’s output of butter had in vucased from 400,000 cwt befoie the war to 1,200,000 to-day; and that of the Argentine had grown from nothing to 70(1.000 cwt; while England's export trade was down to only 70 per cent, of its pre-war volume, and she could not buy this huge volume of prr.duce How. then, was the farmer going to go on? That was the problem that the world was up against new—the problem of getting back to a stable and duly proportionate level of prices. THE WAY GET. This couM be done in one of two ways—either by artificially restricting the production of foodstuffs and raw material, and forcing up prices, or by increased production of manufactured goods and reducing prices. The latter was the lino that England wan working on ; and, to lii.s mind, it was the better way. She was reducing prices and the cost of living. The working men were working at lower wages, and thy manufacturers were doing without profits. A voice; What about shipping freights? Air Elmslie replied that shipping freights were now lower, in proportion to working costs, than they should be. In seme u*ades, in which competition v. as exceptionally keen, thoy were actually down to pre-war level, in spite of the higher costs. Out here, he added, prices had not fallen so fast as they had at Home; with the consequence that English goods were underselling New Zealand made goods, and difficulties were thereby created. Wo could get over that in one of two ways —either by restricting imports, which , would hit the farmer by making him pay more J'or many of the things he had to buy, or by reducing producing costs here. The latter, to his mind, was the wiser course to pursue; and as he had already stated, it was the course that England had taken. “GET COSTS DOWN.” Unless we got costs down, we would never g£t right. And to get them down would not hurt anybody in the end. If, for example, a man's wages were halved and the cost of necessaries was also halved, he was no worse off thanbefore. It was dangerous to let things slide• and he did 1 not think that the position was sufficiently understood-here to-day. The cost of production was now the root factor; and unless it was faced—if any country failed to meet it fairly, that country was bound to suffer in consequence. He had stated Jiis own views. They might work things somewhat differently; but he asked them to consider carefully the points he had submitted to "them. (Loud applause.) A liearty vote of thanks was accorded Mr Elmslie, and a verse of the National Anthem brought the proceedings to ix close.