PROBLEMS OF INDUSTRY

Otago Daily Times, Issue 21530, 30 December 1931, Page 11

PROBLEMS OF INDUSTRY

MACMILLAN REPORT DETAILS OF THE EVIDENCE. (From Our Own Correspondent.) LONDON, November 18. Alinutes of the evidence given before the Committee on Finance and Industry, presided over by Lord Macmillan, have been issued. Chief points in the report, which was signed by all the members except Lord Bradbury, who presented a memorandum of dissent, were:— . . The economic difficulties ol the postwar decade created by the recent falling world prices are primarily due, not to wanton misbehaviour on the part ot monetary factors themselves, but to unusually large and rapid changes on the part of non-monetary phenomena — namely: — 1. The unusual instability of the demand for capital. 2. War debts. 3. The rapidity of technical changes in manufacture and production. 4. The shifting character of demand. 5. Rigidity of wage rates. (i. The growth of tariffs. 7. The embarrassment of Budgets. S. Violent changes in speculative activity in New York and elsewhere. Air Alontague C. Norman, the governor of the Bank of England, in his evidence, said there were two things externally to which, over the years he had been working at the Bank of England, he had really devoted the greater part of his time. “ The first of those —long, troublesome, and, in some ways, disappointing—was the stabilisation of the European countries which had lost what they had possessed before the war. That, which I thought, and still think, wijs necessary, although difficult in many ways, is to-day, and has been for some time, in the main achieved. The second thing was in many ways more difficult, and to some extent has been less achieved, but is in process thereof; that was to bring about co-operation among the central banks of Europe and the world on the sort of lines which were originally sketched at Genoa. The latter followed the former.” PROCESS OF RATIONALISATION. In regard to industry in this country, he said:— “The information which I have received leads me to believe and hope that the salvation "of industry in this country, without which commerce and finance cannot long, or indefinitely, continue, lies in the process of rationalisation, as it is called, which I am not going to attempt to define, which has been defined in many varying ways, but to which I am a strong adherent, and it is towards the goal of rationalisation, however it be precisely defined, that I hope the Bank of England will contribute as much as it can over the times to come. , “ Broadly speaking, 1 believe, if I may say so; that the salvation of industry in this country lies first of all in the process of rationalisation, and that is to be achieved by the unity or unification or marriage of finance and industry.” THE BANK RATE. “ The main consideration in connection with movements of the bank rate,” said Air Norman, in another part of his evidence, “ is the international consideration, especially over the last few years. So far as international position is concerned —certainly until the last few weeks —we have been continuously under the harrow. “ The whole of the international machinery is bound together and works as a whole, and what is called the gold standard is the cement by which it is bound together.” ■ Mr Norman also stated that the raising or lowering of the bank rate was an effective instrument for preserving the stock of gold. Lord Alacmillan: Externally, you say your instrument achieves its purpose of arresting the flow of gold if you raise the bank rate. Internally, how do you conceive that it operates? Air Norman: 1 should think its illeffects were greatly exaggerated and that they are much more psychological than real. “ I think that the disadvantages to the internal position are relatively small compared with the advantages to the external position. “I have never been able to see why, for the last few years, it should have been impossible for industry, starting from within, to have readjusted its own position. I believe that had it been done •the whole face and prospect of industry would look different to-day. It is this long period of mischance, of being in a jam, which seems to have disheartened industry.” SIR OTTO NIEAIEYER. Sir Otto Niemeyer, sketching the background out of which the problem had arisen, said that one of the effects of the war, more particularly latterly, had been to turn purchasers from what used to be regarded as necessaries in the direction of what used to be regarded as luxuries. “We added to our troubles by the coal policy which we pursued in 1919-20. “We had then for the moment, owing to difficulties of shipping and other reasons, a monopoly of the coal supply of the world; we kept the price of coal for export very high, in fact, we profiteered in coal, and the natural effect of that was to force other countries in Europe and other industries in this country either into oil, which we do not produce in this country, or into electricity, which we cannot supply abroad. POSITION OF BRUTE FACT. •' 1 believe that development towards oil and electricity was bound to happen in any case, but that our own actions in dealing with coal at that period accelei* ated it and telescoped it into a much shorter time, and, therefore, the nation was given much less time in which to readjust itself. “ For many reasons we were likely to be more affected by the unavoidable depression post-war than anybo'dy else. “ It seems to me that that position was quite inevitable, and, as I see it, it is not monetary at all, that fundamental position, it is a .position of brute fact. “It is a position which, it seems to me, called on our part for very great adaptability if we were to meet it without great discomfort; but after the veiy great strain of the war, and with the very conservative tendencies of Britsh industry, and, to some extent, British labour, that adaptability has not very readily been forthcoming. That seems to me to be the fundamental background of our problem. Sir Henry Strakosch, who took a considerable part in the establishment of the Reserve Bank of South Africa, attributed much of our trouble to recent instability of prices. The chief cause oi the fall ot prices during the past 12 months, in Ins opinion, was the hoarding of gold by the United States and France.