A WORLD BARTER CRISIS

Taranaki Daily News, 11 June 1931, Page 3

A WORLD BARTER CRISIS

PRODUCTS SELL SLOWLY LIFE ON A NEW ECONOMIC BASIS. THE READJUSTMENT PROCESS. (From Our Own Correspondent.) Wellington, June 9. Reviewing the state of trade at Home and abroad recently, the Economist (London) said that “during the past few weeks the business position has disappointed the hopes of improvement which were entertained earlier in the year. The plain truth is confidence is still lacking and the business world is still waiting for something favourable to turn up either in political or financial circles.” At' the end of March last the index number of commodity prices was favourable, and although the improvement shown thpn was exceedingly, small it appeared to observers that the downward trend of prices had ended.

The statistician of the Financial Times went further and stated that wool had taken a definite upward trend. Since then wool and other commodities have receded in value, hence the despairing comment of the Economist. The amusing feature of the present situation is the claim of certain business and other men to hear an optimistic note. Optimism just now is a desirable virtue, but even optimism can be made ridiculous when absurd statements are made by the optimist. Some of those who profess to be optimistic assure ’us that the worst will be reached and passed next month, and that the world, and New Zealand and Australia in particular, will experience a revival. The optimists very wisely do not attempt to supply chapter and verse to emphasise their prophecies, nor do they supply any reliable data in. support. It cannot be too frequently observed as far as New Zealand is concerned, the slump is not of New Zealand’s manufacture. It has been forced upon us, and we must try to understand how and why it was forced upon us to appreciate our present position. There was a time, and not so very long ago, when our customers did not hesitate or grudge paying 180 s. per cwt. for our butter, 90s. per cwt. for our cheese, 15d. for our wool and correspondingly high prices for our other products. To-day they hesitate to pay 115 s. for butter, 50s. for cheese, and 6d. for wool. ’ They cannot offer better prices because they have not the money. Obviously, until the economic conditions of our overseas customers improve it is useless expecting higher prices, and it is just a waste of time predicting the end of the slump for this month or next month. When keen and close observers in England are unable to forecast even approximately the end of the slump it is futile for men out here without knowledge or data to make favourable forecasts just for the sake of striking an optimistic note. Striking such a note may momentarily cheer the crowd, but when they face the realities they know differently. Improvement will come when our overseas customers improve their economic conditions, and that is not just yet. Their conditions are depressed because they cannot sell their products as freely as before, and if they cannot sell they cannot buy. This is a barter crisis. We are buying less from overseas because we cannot obtain as much for our produce as we used to. The world cannot buy and sell goods as freely as before because of. prohibitive tariffs. But it must not be assumed that tariffs are the only cause of depression. There are other factors contributing to the depression, but tariffs constitute, the dominating factor. We cannot force up the prices of our products overseas. Dow prices for our products have come to’ stay, at least for two or three years. ' It is doubtful; indeed, one can say it is certain, that we shall not for very many years to come again see butter at 180 s. and lamb at 13d. We must look this fact in the face. Our income .has been, greatly reduced with no immediate prospect of its being as large as it was in, say, 1920. That being so, wp must as individuals and as a nation, adjust our expenditure to. suit our income and strive to employ all the employable people in the land. We have to rid ourselves of extravagant ideas and to realise that to-day we. are poor because of the heavy drop in the national income. Adjusting downwards is as painful as drawing a tooth, but the pain has to be endured. Depression has not a perpetual lease of the world’s economic conditions, but it has now a short-term lease.