ECONOMIC DEPRESSION

Otago Witness, Issue 3995, 7 October 1930, Page 48

ECONOMIC DEPRESSION

EFFECTS IN AMERICA.

ADDRESS BY THE PRESIDENT. NEW Y’ORK, October 2.

A message from Cleveland (Ohio) states that President Hoover, addressing the American Bankers’ Association, said: “ V e have had a severe shock, and thero has been disorganisation of our economic system, which has temporarily checked the march of prosperity. Though our production and consumption have been slowed down to 85 and 90 per cent, of normal, yet by the very fact of the steady functioning of the major portion of our system do we have the assurance of our ability and economic strength to overcome this decline. The depression is world-wide. Its causes and effects lie only partly in the United States. Our country is engaged in over-speculation in securities which crashed a year ago, Perhaps even the larger imminent cause of our depression has been the effect of the collapse of prices following the overproduction of important raw materials, mostly in foreign countries. Particularly has the planting of rubber, coffee, wheat, sugar, and cotton expanded beyond world consumption. Even in normal times certain metals likewise were over-produced, notably zinc, copper, and silver.”

Mr Hoover continued: “These major over-expansions have taken place largely outside the United States. This collapse has reduced the buying power of many countries. Prosperity has been temporarily affected by various causes, op some occasions accompanied by political unrest, such as the developments in Brazil, Columbia, Chile, Peru, Mexico, Austr? lia, Canada, India., China, Argentina, Cuba, and Java; but readjustments in prices are far along the course. Most of these commodities are below the level at which sufficient production can be maintained for the world’s normal needs, and, therefore, sooner or later must recover.

“We are able to a considerable degree to free ourselves of world influence and make a large measure of independent recovery because we are so remarkably self-contained. We shall need mainly to depend upon ourselves for recovery, as other nations are in greater difficulties than we are, and we shall need again to undertake to assist and cooperate with them. There is no simple explanation of these movements. This is not an occasion for an analysis of the many theories, such as too little gold or the inflexible use of it. Whatever the remote causes may be, the immediate cause of most hard times is inflatory booms. These strike some phase of economic life somewhere in the world, and the re-echoing destructive result will bring a depression. We may safely assume that our economic future is safe so far as it is dependent upon the competent handling of the problems of productivity, but one thing necessary is a further advance toward stability, which is even more urgent, for with higher standards of living the whole system is more sensitive and the penalties of instability more widespread.” The President concluded by saying: “Any recession in American businesses but a temporary halt in the prosperity of our great people.”