TRADE VARIATIONS

Otago Daily Times, Issue 18763, 17 January 1923, Page 2

TRADE VARIATIONS

RELATION TO ECONOMIC THOUGHT. REGULAR RECURRING DEPRESSIONS. (Per United Press Association.) WELLINGTON, January 16. “Trade depression in Australia, in relation to economic thought,” was the subject of a paper delivered by Professor D. B. Copland, of Tasmania, before the Science Congress yesterday. During the course of his paper he pointed out that early in 1920 prices in England and America began to break and deflation followed. The causes of the crisis were summarised as follows; — 1. 'The deflation in England and America and the heavy fall in domestic prices. 2. The over-issue of credit beyond the limit allowed by tbe reserves. 3. The stringency of the money market and the action of the banks in respect to credit. 4. The drop in prices of metals,, causing great difficulty to the mining companies. 5. The heavy fall in the prices of agricultural products, meats, and later of dairy products. 6. The bad harvest of 1920, 7. The heavy importations during the war. 8. The difficulties of regulating industrial costs. 9. The decrease of production. jO Psychological reaction from the boom period. The notion of the banks had been criticised, but it was necessary to exteua credit to avoid a widespread smash. The difficulties increased with the development o£ the crisis. The markets fell off, the costa of production remained high, and credit was ■mlt to obtain. Labour resented the wage reductions, rho unemployed were insistent in their demands, and the burden of taxation was not lightened Some aspersions wore cast upon the Arbitration Act, but the doubt, suspicion, and mutual recrimination between capital and labour did nothing to adjust the recoveries from business depression. Tho crisis only served to reveal the weaknesses of the financial and economic methods during the period of prosperity. Efforts were now being directed towards emerging from the depression, and the public and industrial leaders had yet to learn that there was a business cycle, with regular recurring depressions, caused by Ihe operation of definite economic factors that could bs controlled. The economies were not given sufficient, importance and economic research had not provided data.. What we required at present was a thorough quantitative analysis of the main features of our business and financial organisatipn. Amongst the factors requiring attention were:—

1. The compilation of an index of production . , 2. An analysis of the relations of the wholesale and retail prices and the cost of living , . . , 3. An exposition of the principles upor. which the banking and credit system of the commonwealth was based. . 4 An expositioi of the principles of the foreign exchange by which our imports and exports arc financed. . , b A description of die investment marxet and the movement of stock and share quotations. ... 6. An analysis of the relative importance of domestic and foreign trade. Those business cycles might be controlled, and to that, end it was suggested that an economic association of Australasia should be formed, aiming at: 1. To review the legislation and the events of economic importance in Australasia. 2. To provide information upon the publications and the events of economic importance abroad.

3. To map out a field of economic research end to co-ordinate tho efforts of students and others.

Business forecasts similar to those of Harvard and London would then ho practicable and economics might win its nlaoe as a rccogincci university study a,no guide to public policy and legislative action.