CAUSE OF DEPRESSION

Taranaki Daily News, 9 June 1930, Page 16

CAUSE OF DEPRESSION

UNITED STATES BLUNDERS. (Special Correspondent). Wellington, June 4. The United States is suffering with .the rest of the world from the prevailing depression, and that depression has been caused by the blundering of the Federal Reserve Board of the Untied ? States in its monetary policy, at all events that is the opinion of that eminent Swedish economist Mr. Gustav Cassel. He holds that' the United. States holds practically absolute power over the welfare of the world. Since the close, of the war America has been the ultimate arbitrator of whether trade was to be good or bad. Professor Cassel considers that the slump of 1920-21, as well as the present crisis, aro duo .to the inability and in- ***"“■ Capacity of the Federal Reserve to regulate and conduct its monetary policy. However, if the United States has caused, the present - depression it is suffering with the rest of the world.. The general level of industrial trade activity in the United States in April was still far below that of a year earlier. The unemployment situation was reported to bo less acute in some cities, though it was not clear yet that a genuine nation-wide improvement had been .effected. The most encouraging developments were the increase in construction contracts, the greater strength of commodity prices and the continued ease of monetary rates. These conditions, as reviewed by the “Guaranty Survey,” were not alone sufficient to warrant the expectation of a return to high levels of business activity in the near future. The increased finances of commodity prices had not lasted long enough to demonstrate whether it could be regarded as more than a momentary, reaction. The same might be said of the trend of construction, with the added qualification that the residential building which must in the long run determine the general course of activity had not yet shown conclusive signs of revival. Easy money would in all probability, last for some time, but the influence of this factor was mainly negative. An abundance of funds for purposes would stimulate trade recovery when the time was ripe for such a development, but it could not by itself go very far towards converting depression into . expansion. The most optimistic forecast consistent with conservatism was that the worst was probably over, and that coming months were likely to show‘a gradual and probably irregular improvement. The depression had already continued long enough to indicate' that the high levels of production attained last year generated a more unsound commodity situation than ap- . peared on the surface. The collapse of stock prides undoubtedly aggravated conditions to some extent.