THE WORST OVER

Otago Daily Times, Issue 23326, 19 October 1937, Page 9

THE WORST OVER

LONDON STOCK EXCHANGE SLUMP TALK FANTASTIC RECORD INDUSTRIAL ACTIVITY ' I (United Press Association) (By Electric Telegraph—Copyright) LONDON, Oct. 17. By general consent, the past fortnight has been the most anxious on the Stock Exchange since 1929, but, fortunately, the worst seems over. City business men all agree that the slump talk is fantastic. The Economist declares that the majority of industrialists endorse the opinion of the Prime Minister and the Chancellor of the Exchequer that recovery has not yet reached its peak. There is little real evidence in British national economy to suggest that a real slump is ahead. On the contrary, many industries have spectacularly increased their rate of activity in the recovery years, and there is no sign of a serious decline in the purchasing power of the public. Even export trades are less vulnerable than in 1929, as the primary producing countries are no longer dependent on foreign loans. The economic defences are thus sunder than in 1929. A repetition of such a slump is most unlikely. The Economist’s quarterly analysis of industrial profits also makes the slump talk seem ridiculous. The rise in profits has been so generous that shareholders received increased dividends at a time when industry as a whole is financing capital growth from its own resources. The Economist’s index shows that business activity as a. whole is running at record high level. Therefore it appears that the prices of many industrials are below reasonable levels.

The present state of the commodity markets is described as convalescent, Wool remains disappointing, and little business was done at Bradford. The uncertainty of the future trend in prices has undermined the confidence of all sections of the industry, but it is believed that there will be plenty of business once a reasonably stable price has been re-established. The decline has been greater than anyone anticipated. Certain wool buyers and top-makers have been bears. Many are still offering forward tops at prices well below the present values.

Butter remains firm, with a strong undertone. The advance in the retail price has not affected sales, but buyers are becoming cautious and are operating from hand to mouth. Cheese is featureless.