DISRUPTION OF TRADE

Taranaki Daily News, 11 August 1932, Page 9

DISRUPTION OF TRADE

DANUBIAN SITUATION. E EFFECT OF NEW BOUNDARIES. 5 _____ t > The most critical situation created by t disruption of trade is the Danubian . situation, says the Journal of the Nai tional City Bank of New York. The > old Austro-Hungarian Empire, although I racially a patchwork, was economically a balanced State existing upon a diver- : sifted production, and mutually advant- ■ ageous exchange of products. The parts ; qf the Empire that are now in Hungary, Rumania and Jugo-slavia, were predom- ■ inantly agricultural, and Austria and • . the' present Czecho-slovakia were the [ manufacturing sections. Each section . produced what it was best fitted for and , each complemented the other, all ex- ; changing'to the profit of all. The erection of new political boun- , daries in this area, of course, did not , /alter the soil, climate, location of mai terials, abilities and • training of the > people or the other factors which had i determined what each section could economically produce, but the policies ■ of the new governments have been in the direction of self-sufficiency and aims ed at overcoming such factors rather , than deriving benefit from them. The i fact that the existing industrial plant was sufficient for the supply of agricultural countries was ignored by them because the plant was now within another political boundary; and the farming countries set out to build factories and the factory countries to stimulate farming. Before ■ the separation Hungary milled wheat for the Empire, but the other States set about building mills to be rid of dependence on Hungary. Hungary doubled its spinning and weaving plant in order to buy less from Czechoslovakia. Austria, an industrial country now bereft of its markets, has tried through subsidies to build up agriculture in the unsuitable alpine regions. The agricultural States, with conditions, unfavourable to industry, inadequate transport facilities and skilled labour lacking have been building factories, naturally providing high tariffs to keep them going. According to the International Chamber of Commerce the tariffs of the Danubian countries one year ago averaged nearly double those of most of the Western European countries. In all this there was insufficient consideration of the matter which is responsible for much of the present difficulty, namely, the wasteful cost of the duplication of factories, agricultural activity and banking in the region where the old state of affairs was working very well. It is said that plants had to. be abandoned and the investment in them lost while similar plants were built only a few miles away, but across a new border. Of course, this duplication could not support itself and the local Indus tries -with few exceptions had

not developed real strength when the depression began. Nor had any country | approached in measurable degree its goal of self-sufficiency, or even altered the broad character of its trade. The farm countries continue to export farm products and import manufactures, and vice versa. Trade still dovetails, but with the great difference that all trade is restricted and hampered, the cost of living is raised and the standards of living are lowered. Moreover, a smaller percentage of their trfidc is with each other, and more with other counties, an uneconomical condition.