THE POSITION IN ENGLAND.

Southland Times, Issue 21073, 3 May 1930, Page 16

THE POSITION IN ENGLAND.

GLOOM ALREADY LIFTING. SALES WILL SPRING UPWARD. Within the next two months, unless signs fail, the automotive industry will lead an upward swing in business just as it precipitated a sharp recession towards the close of 1929, writes James Dalton in The Motor. The recovery will be gradual but renewal of demand for motor cars will exert a tonic effect upon the nation’s trade. A larger attendance than last year at the annual New York show and subsequent local shows, with a substantial number of retail sales indicated that the public has by no means lost interest, in automobiles.. While the number of paid admissions in the metropolis did not reach the record figure of 1928 the fact that it was ahead of 1929 —the biggest selling year in history—is regarded as a favourable omen. With the awakening of spring the motorminded American people will not be able to resist the hire of the new, sleek, sturdy, stylish, swift-moving automobiles offered to them in every price class. Never since individual transportation became a necessity have they been able to withstand this appeal more more than a few months at a time and it is doubtful if ever they will. The greatest of all manufacturing industries naturally has become the principal prop under prosperity. When it resumes the forward march, which was halted while internal readjustments were being made, the rest of the industrial army will fall in line. The pall of gloom which has overhung the country since the closing days of last October already is lifting and it will disappear more rapidly when the automotive sun comes out of its winter eclipse. Since its remarkable escape from a major panic only three months ago, the United States has taken stock of its strength and its resources. If it could survive safely the shock of having billions of dollars in security values wiped out almost overnight the foundation upon which its prosperity rests must be as solid as a rock but the bursting of the speculative bubble threw it off its stride for a time. Present conditions are not pleasant and they will not improve immediately. The stock market crash was a terrific shock and November witnessed the sharpest recession in industrial activity in any single month since May, 1924. Both these blows were caused primarily by over-production of automobiles. It cannot be said, however, that the big break came without warning for November was the fourth consecutive month to register a decline in industrial output. The automotive, steel, construction and cotton goods industries all were hard hit at the same time. The consequence was a large amount of unemployment in the principal industrial centres with a sharp shrinkage in the purchasing power of workers. Detroit, Flint, Lansing and Pontiac, dependent chiefly upon automobiles, suffered severely and they are still suffering, though not so seriously. In the aggregate, nevertheless, taking the country as a whole, hundreds of thousands of workers are unemployed. It is a hard task to convince a man he has nothing to worry about when he has no work. It is almost equally difficult to convince a man who is likely to lose his position at any time that there is no reason why he should not spend his savings to buy things that which ' are not absolute necessities. Unemployment is much more serious than stock market losses because it is consuming capital whereas speculation, in most cases, consumed only surplus. But the one has been the result of the other. When those who lost in the market regain their confidence they will resume their buying of goods such as new automobiles. Almost simultaneously the plants which produce these goods will expand their output and the number of unemployed will decrease. Thus the delicate balance of trade and industry will be gradually restored. Restoration of this balance probably will not start until buying of new series automobile begins on a moderately large scale. But past experience has demonstrated that this will not be delayed later than the first days of spring. There is no lack of money with which to buy and when buying is resumed it will do more than anything else to restore confidence. Furthermore, it is probably safe to assume that the worst is over. Conditions now are not so bad as they were, and it is our belief they will grow steadily better although it may be several months before complete recovery is effected in certain lines. It would be unfair to anticipate miraculous results from the series of conferences instigated by President Hoover. They did much to arrest depression and restore confidence but it is not to be expected that either the government of industry will initiate programmes of reckless expenditures merely to stimulate business. Great industrial expansion, as a matter of fact, would be as much of a calamity as the stock market disaster because we already have a surplus of productive capacity. The most that can be expected immediately is prompt initiation of public building flood control, highway building and public works programmes by the federal and state governments together .with expansions and improvements by railroads and public utilities. These undertakings will give employment to many thousands of men, directly and indirectly, while industry in general is marking time. Perhaps a more important result, will be a closer relationship of various industries and trades, with a better understanding of each others problems, through contracts on the committees and commissions which have been established to institute a general planning movement designed to stabilize business. There would be no necessity for periodical ups and downs if full advantage were taken of all the information which could be made available. Another development which ultimately will be beneficial is the export of large quantities of gold from the United States. Our foreign trade suffered severely from the credit stringency in Europe and had fallen off sharply before the recession began at home. A full revival will help to take up the domestic slack. Our gold position is so strong that exports of the metal are unlikely to affect seriously the credit situation in this country. While money rates probably will not fall as low as they were a few years ago there will be plenty for all legitimate enterprises and a further reduction in the. Federal Reserve rediscount rate is likely when the necessity arises. One distressing phase of financial conditions which is only now becoming apparent and which indicates the extent to which small speculators were involved in the stock market, is the fast that for the first time in 20 years the nation’s saving account has dwindled. Service operations of automobile dealers, generally speaking, probably will be. on a sounder basis in 1930 than they have been for years. An earnest attempt will be made to recover business’they have lost and to expand profits by the use of modern methods and machinery. In this direction the benevolent insistence of certain companies that their dealers shall play greater attention to service is distinctly helpful.

While the outlook for the industry for the next two months is dreary, tie prospect for the longer term is decidedly cheerful. The Motor sees no reason to revise its production estimate of approximately 4,000,000 passenger cars and 625,000 trucks in 1930. While the volume will be materially smaller 'than last year the aggregate of manufacturing profits promises to bo as large, even for well managed parts companies, and unless pledges of inform are speedily forgotten the eapings of automobile dealers will be better than « at least five years.