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Poverty Bay Herald, Volume XLVII, Issue 15465, 9 March 1921, Page 5

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I EFFECT OF TRADE SLUMP, | CONDITIONS IN ENGLAND. 1, LONDON, Jan. 7.—A week or two I .ago the Great West End soft goods I lirms announced their bargain sales, and 3 to-day they are unloading their stocks g on an appreciative public, who have long been reluctant to buy at the high | prices that had made .even the well-to- | do postpone or drastically - limit their I purchasing. The movement has spread B and hardly a shop dealing in leather | and soft goods has ventured to hold II out against the trend of the clay. The §! necessity of the trader is the consum- | er’s opportunity, and it- is not• surpris- |! ing that the public, after having groan- | ed under excessive prices for two years 1 should rejoice at the opportunity of ao- | quiring something which is sold at a I, loss by somebody else. I The liquidation by manufacturers’ cf |; accumulated stocks has been on a very I!.extensive scale. Business had to be roll stored, and there was no possibility ot I! stimulating fresh activity in the mills I j and factories until warehouses had been 1 cleared. But the situation is so unusual I .that the general slump may not be taken | altogether as an indication of better. s times to come, either in this country or in the colonial markets. New Zealand consumers will benefit to a certain extent, for doubtless merchants of the Dol minion will have to clear tlieir surplus | stocks at prices in sympathy with the I; Home merchant, but over and above I' the simple principle of supply and de- |; Jrmnd,. there are forces at work in this | country which must be-taken into ncI count when considering the level of 1 prices in the months to come. | EFFECT G'F EXCESS? PROFIT DUTY, j In the first, place, if goods should eonj tinue to he sold at the’present, reduced I figures, production would have to cease || and unemployment would become genii oral, for if prices Wore too high in the | past they are at present too low—though | even now they are not near the pre-wai level. For the most part the reductions j are the outcome of'a policy which aims jat a. resumption of normal trading at j the earliest possible date, and a corre- | spending diminution in unemployment in the industries concerned. Rut the ex-’ cess profits duty lias induced something in the nature of a gamble. The rumor or the hope that, this heavy .burden will he abolished in the near future has led firms to forogoo t lieir profits now in ordoi to clear their stocks, for so long as the duty is in force, £0 per- cent, of the excess profits goes to the -C-fthhcelloiVof the I Exchequer. Thus a trader sacrificing to-day £IOO of his profit by a reduction in prices is really losing only £4O of bis I own. Hence the race to ,cul. losses while the excess profits duty is in existence. For the manufacturer or trader says, in effect: ‘-Since I must stand a loss at some time or other, better to face | it now, thus levelling down my profits -for the year, and serving the, useful purpose of keeping my excess’profit tax at a minimum.” I PRESENT BRICES TEMPORARY. “That many linos are being sold at bargain prices none will dispute,” said [ the London buyer of one of the largest Dominion soft goods firms. “The publicnow have mi opportunity of '.purchasing at prices in some cases under the cost I of production. The manufacturer, whole sale merchant, and retailer,. all have . large stocks on hand which they cannot I afford tu hold for hotter times. But il | is difficult to induce the public to buy I some of the lines, and as a result.one firm lias been cutting against another, until prices are brought down* below the cost of production. “But business firms cannot continue along thgse lines. .As soon as present stocks are cleared and the manufactur ers receive orders, and make fresh goods, these will have .to be sold at a price wliicli will cover cost of production, and show a profit sufficient to pay interest on capital. It. is practically certain that as soon as there is again a*demand fot goods prices will harden, from the cost of the raw mnt.erial to the finished article. Every firm in business to-day realises that the present is a time for reconstructing tlieir business. Every body is anxious to reorganise their busi ness while the Government, is hearing 6( per cent, of the burden, as most firms have had to pay excess profits, duty, arid in some cases with oxcess profits duty, super tax, and. income tax, the Govern ment lias had as much as 85 per cent, of the profits. PRICES PAST THE SUMMIT. “Present 'indications certainly point to the fact Hint, prices have passed the summit., and are on the decline! but one must not have visions of goods at pro, war prices. If this ever comes, it will bo years hence, for up to the present il is only the cost of the raw material and competition that must have made the reductions. Wages have not conic down, and cannot do so while the cost of food is so high. The day of speculation is over, and the best way to come through these difficult times is for everybody to face his own responsibilities, and buy his normal requirements, ami in this way prices will steadily maintain a > <4t>wmvard trend, with advantage to. all. If people refrain from buying until they are forced to do so, and then nil clamor for good* at. once, it. will force boom prices on us again, with more disastrous results than he-' fore."—Auckland Herald Correspondent