THE WORLD-WIDE DEPRESSION.

Otago Daily Times, Issue 21198, 2 December 1930, Page 5

THE WORLD-WIDE DEPRESSION.

TO THE EDITOB. Sib,—Tour correspondent “ P. F. 5.,” in criticising the. ideas contained in my letter appearing in your columns of 26th inst., states that much of our trouble has arisen' from local/causes. With this I agree. _ He then states that it makes little difference whether the accumulated gold that is, now lying idle is put in circulation or not. . With this I cannot agree. Some years 'ago the Bankers’ Magazine gave a most startling instance of the effect of ■ gold ■ 1 exports upon the prices of our gilt-edged securities. ‘‘During a period of 10 weeks-a certain group of American financiers drew from the Bank of England sums-equal’ in all to £11,000,000- in gold and shipped it to New York. The transfer of the-gold caused a fall in the price of 325 of our representative securities, equivalent’ to ‘ £115,500,000.” It naturally follows that if the banks are depleted of their gold upon which their currrency is based,, they have to call in their advances so as to keep their securities and advances balanced. This depresses the market of all commodities. During the period between 1880 and 1800 there was a' similar period of . depression, due in a measure to the currency question being put of balance when there was a very strong agitation for bimetallism. About this time the South African goldfields were opened up, and the West Australian goldfields provided the increased quantity of gold which in a great measure stabilised it at the rice of £3 15a per ounce, at which it stood for many years with , scarcely any variation, and in consequence trade was carried on without violent fluctuation of prices for a long period. Td-day’s price of gold is £4 7s 6d per ounce, During this time the increase of _ science and the invention of labour-saving machinery has displaced, large armies of men, so that we may expect to have constantly with us a large army of unemployed. Take, for instance, how modern machinery has displaced l men in the iron and steel - industry :—(1) Two men unloading with the electric magnet displace 123 men; (2) in charging the furnaces two men using a shift hoist truck and automatic weight displace 14 men;. (3) in pig iron casting seven men displace 60; _ (4) in open hearth operations one man displaces 40; .12 men . with travelling cranes do the work of 37. In other words, 24 men are now doing work that used- to occupy the full time of 274. , Regard for your space does not permit of my making reference to the local contributing causes beyond saying that the abolition of our Arbitration Court is not likely to become one of the remedies. Should “P. F. S.” wish me to reply further to his letters he must first sign his name; —I am, etc., H. K. Wilkinson. Dunedin, November 28.