A “BARTERS” CRISIS

Stratford Evening Post, Volume I, Issue 84, 18 March 1931, Page 5

A “BARTERS” CRISIS

BANKER’S VIEW OF DEPRESSION In his address at tho annual meeting of the Westminster Bank, Ltd., tho chairman, the Hon. Rupert Beckett, said: “I cannot help thinking that the effect of these gold accumulations on tho general trade situation has perhaps been overstressed. We are passing through, not so much a gold crisis, nor yet a credit crisis, but what I may term a ‘barter’ crisis. The majority of the population of the world are producers of the primary commodities —foodstuffs, minerals, animal products such as wool, and. vegetable products such as cotton and rubber. In almost all of those, Nature has yielded a series of bumper harvests and gatherings, with the natural consequences of a plethora of supplies and constantly falling prices. Now r , international trade is fundamentally an interchange of raw materials and manufactured products. It follows, then, that tho quantity of the latter which the primary producing countries are able to take from tho manufacturing countries will depend upon the relative cheapness or dearness of the two classes of goods. Between the raw materials and tho finished product there are pumerous preparatory and finishing processes, at each stage of which production costs of all kinds have to bo added. “When a violent fall occurs (as it now has) in the value of tho raw material, because these intermediate costs cannot bo reduced simultaneously, their weight becomes disproportionate, and the price of the finished product is thrown completely out of harmony witti 1 that of its basic constituent. Tho primary producer is thus unable to take in exchange for bis commodity as largo a quantity of manufactured goods as that to which ho has been accustomed — to tho impoverishment of himself and tho manufacturer alike. This disequilibrium is a feature of all abrupt price movements, but its seriousness for the British industrialist is aggravated at the present time by the already swollen expenses which he has to meet, and much of which it is not in his power to alleviate. For a number of reasons, our manufacturing costs are substantially higher than those of our competitors. If wo are to sell our goods to tho primary producers of tho world, it is of urgent necessity to explore every possible 'avenue of economy and to put into immediate operation every means this search may reveal of reducing our costs. ”