The Effects of the American Crisis.

Timaru Herald, Volume XIIC, Issue 13608, 30 May 1908, Page 3 (Supplement)

The Effects of the American Crisis.

(Mercantile Gazelle.) In October anil Xovrmlxr last. when the financial crisis in the United States was at it-", worst. we were assured by quite a number of authorities that Xew Zealand not being financially connected with America, could not and would not feel the ill-cffce;r> which others thought would be tlm case. Present conditions wholly discredit 'the f(.recasts of the optimists, for Xcu* Zealand, in common with the rest of the world, i.s suffering rather severelv. The tradr and population of the United State?: ate important factors in the commercial affairs of the world, and when America i-» depressed the rest of tlie world vet'y quickly knows it. If we examine into the effett'i we will see that they art; world wide and affect alnu;st- every class of busiiies*. ihe first effect was the tightening of money ill Kurojie; the bank rates in London and Berlin and some of the < tlier European centres were at tin; highest for many yean». This paralysed credit, and although the rates llave rev-rted o t.he normal : the effect- on trade has been adverse and continues Even in New York, which was the storm sentre of the financial panic, money is tr>w comparatively cheap but trade is deadly did!. The crises brought about a depression in the diamond and jtearl trades. Ihe American.* are the best customers- for these articles of luxiiiy. and the conipu!:-orv withdrawal of their custom precipi.ated bol h indititriee into a depression. Most of I h.> diamond mint*; rf South Africa have bem obliged tit her to down or very greatly res.rict the output. In An.-U.Tdam the diamond cutter:- are suffering veiy severely and la.-t month it Mart decided to cease work for four werk.*. The pearl fishery «;f Ceylon had to be abandoned th:«> year be-eatl.-e of the low prices ol .parls The Indian j* all trade is ;:aid fo lie h"lf' i - ing fif.ni severe depression. which is direr - !v traceable to tlk* iceeiit linaneial crisis in the United Stated. Ai th" end of the fishing sea.-;<;n the pearls are finally collected at Bombay by the jewel merchants, and are then despatched for the most- part to Park. where they are purchased chiefly by American magnates. At the present time pearls are jelling in Paris at- a third of the usual price, and jewellers have cancelled all their nrdei.s for furllr.-r consignment.? from Uombav.

All tin- indin'riai m<tals. but particular- - '.v copp;!•. till, ami lead. have ln-en depressed. 111• I tli'.i'.- i- every probability of pig-iron biing affected presently. America. ir> the principal pi'duor of copper and Kail, ami for miiiic time was* the greatest consumer, but with tin- crisi.v came the restriction of both output and coiwuniplion and a tieine mlot'.s fall in valiku. I h<Broken Tfill iniii^ w have been dnvct ly affect: -I . and within the pa~t Imh w:-ks tlf rabl.have I old lis of r> due d e:irninpand smaller dividends. I'ig-inn i» i: 1 conimanding good price l -". but the kites' mail advices indicate thai- dumping in foreign markets on the pari <>! American producers wa, expert-d. '[!:*■ .-ilk trade ha." einbarrawd t !i!'»i h- nr.-. is. ami many Jap.muv >ilk in-irh:m! v liav • gone under. In Lyons ;md Yokoham.i i'liT-l a aceuililllat ion of siik stuffy. and production ln:<> to b> curtailed. The woo! trade of Australasia has been paralysed through the -liiinkage in the demand from the United Stat'.*. Cut lull and

linen have been more or less allecled, but in this in tin; end will benefit consumeKs by cheapening manufactured articles. New Zealand hemp has declined in value, and its now at a point thai leaver, a very small margin of pn.lit to the miller. Leather, hides, sheep, skii:;-;, and tallow have l»ten hurt. Oreal-.s have not suffered very much, dimply because the harvest wiii> not equal to the requirements, but for all that- the forced .selling of wheat on the part- of American farmers in the last quarter of lai-st year brought down the price <f that cereal. The crieis threw out of work hundred.s of thousands of workers in America and Europe, and to some extent in Australasia. The crisis is in i-.onie degree, responsible for the hardening of money in New Zealand; it is also responsible for the dumping of hops in Kngland and Oregon pine in Xew Zealand. The more closely thj matter is looked into the -more .do we realise its far-reaching effects. ft, i.-, being felt in every part- of the world, and it is obviov:> that there can be no improvement in trade and commerce until America shows some tangible ijigns of recovcrv. American i-.(atements that recovery has commenced cannot be taken at their value. Disinterested observers believe that it will b:< some considerable tint.? before the American* are through with liquidation. An English merchant who recently visited the United Stafes makes the statement that at the time lie left Xew Yorv mercantile busin!.: .s w<i:j extremely dull, all the large distributing houses complaining of the difficulty of collection. Stocks were heavy, and importers were endeavouring to get the manufacturers to hold backgoods which are now coming round ready for delivery. So far as Xew Zealand k concerned it will be Butisfactory if the position gets no wi. rse than it is now. but of tliat there is little hope. Those who remember the effects of the American panic of 1893 will not be dispnesed to take too optimistic a view. Caution and restricted credit should b- the policy of business men just now.