FALLING WORLD PRICES.

Wanganui Chronicle, Volume LXXVI, Issue 18018, 5 November 1920, Page 8

FALLING WORLD PRICES.

HOW THEY AFFECT NEW ZEALAND. OUTLOOK FUN THE FUTURE. “There is no cause for perturbation in tne general financial or commercial situation as it affects New Zealand, although for the moment we may appear to be going through a period of modified and temporary readjustment. Basic conditions are sound, while she may find lower prices for her products, need not. fear any eclipse of genuine prosperity." In brief, this is the consensus of opinion on the financial and commercial situation of the Dominion as voiced by a leading banking authority consulted by the Auckland Star on Wednesday.

“The fundamentals of the situation at present.,” he proceeded, “may be. summed up in some such fashion as this: There has been a period of world extravagance, of speculation due to inflation of currency, to shortage in primary production, and to the shutting-out of enemy countries from the chief markets of the globe. That period has been one of violent fluctuation, like a storm at sea, and we are still feeling the after-effects of that storm. Those effects are particularly felt in New Zealand, which is economically dependent on the outside word for profitable sale of its products. Curtailment of credit, unwise accumulation of stocks, opening ifp of markets, and a general feeling that it is time the economic world got back to normal, have combined to lower prices in nearly every country. Consequently New Zealand, whose products are for sale to those countries, must naturally feel the pinch somewhat when the change comes- But the whole question is very complex, and only a personal opinion can be given upon it. for what it may be worth.” Further inquiries by the Star representative continued the view that there was no cause for alarm so far as New Zealand was concerned. The banks, in view of war loan requirements and moving in response to the general financial situation throughout the world, were adopting a conservative attitude towards future commitments. This attitude had nothing to do with the present speculation in city houses or in farmlands, though in one quarter it was admitter that prices for such property were altogether too high, and any action that would tend to prevent further inflation would have the support of those who can see farthest in the financial world. Meanwhile, however, only the private investor was likely to be hit by a reduction in the speculative price of property, but this fact had small bearing, it was said, on the situation as a whole.

A leading stock and share dealer, questioned as to the drop in Stock Exchange securities, gave it as his opinion that undue significance should not be attached to these declines. Stocks in New Zealand responded to a degree to the tendencies apparent in the British stock exchanges, and there of late, due to industrial disturbances, pronounced weakness had developed. In curtailing commercial credits which, said this authority, the banks were naturally driven by a wise instinct to do, a certain reflex of caution was communicated to the business community, and thus to 4jie dealings in stocks. The nonappearance of the Government’s proposals in respect to the Bank of New Zealand accounted for the lower figures recorded for that stock lately. The all-important question how . these developments on the world’s economic stage would affect the consumer was put to other commercial and financial men. They were hopeful, but in great measure non-com-mittal. “There have been large accumulations of commodities of late.” said one, “bought partly for legitimate business, partly in the hope of further increase in price. These may not be in the warehouse, but on the water, and what is troubling the holders is, whether they can sell on a level or even on a slowly falling market, or whether there will be a touch of panic as in the cotton market in the United States lately, and the ‘nip’ will come- But, generally speaking, the feeling seems to be that, in New Zealand at any rate, there will be a gradual lowering of prices in the near future, and a period of slow readjustment preparatory to a descent to a still lower level.” It should be added, however, that these and other statements are subject to reservations. As expressed above, the factors that interact upon New Zealand's prosperity have their origins outside of New Zealand, and therefore are to a degree incalculable.