The Wanganui Chronicle MONDAY, JUNE 22, 1931. AMERICAN TRADE CONDITIONS

Wanganui Chronicle, Volume 74, Issue 145, 22 June 1931, Page 6

The Wanganui Chronicle MONDAY, JUNE 22, 1931. AMERICAN TRADE CONDITIONS

W J,E 2 < reviewing America's economic outlook on May 12, the "Chronicle” remarked upon, the upward tendency, but sounded a note of caution. The signs were, we said, “encouraging. but care should be taken not, to attach too much importance to the present trend, a temptation which will always be easy to succumb to in times of depression.” .Referring to the mid-March up-treud, we pointed out “that a similar upward trend revealed itself in mid-March of last year, and that the movement exhausted itself by mid-April, to be followed by severe decline. The “Chronicle’s” anticipations have been fulfilled. The monthly letter of the National City Bank of New York for May reports: “The changes in business during the month of April have shown less uniformity than during the earlier months of the year, when advances were fairly widespread. The renewed irregularity probably reflects the passing of the spring peak more, than any other factor, and when all the returns are in and adjustments made for seasonal influences, it is not likely that any great change in the net situation will be shown, nor any important revision of previous views of the prospect called for. Time alone is a very important element in business recovery at this juncture, and the passage of four months from what it is hoped will prove the bottom of the de-

pression has brought gains, not only in activity, but m correction of .maladjustments, which carry us very much nearer the eventual upturn. Meanwhile the basic trend is mostly sidewise, and the approach of summer exerts a restrictive influence, against early improvement in actual volume of production and trade, whatever the course of seasonally corrected indexes may be. The April record has not been brightened by the action of the markets. Indications earlier this year that the downward curve of wholesale commodity prices was flattening out, proved to be deceptive, and the price averages have dropped to new low levels during the month. Of! still greater effect upon the sentiment of the business community has been the renewed decline in the stock market, which must be considei’ed a reflection both of dissatisfaction with present corporation earnings and of doubt that substantial improvement in those earnings during the summer ean be expected. Amidst the confusion and pessimism resulting from the repeated set-backs which have been experienced on the Stock Exchange, it is well to bear in mind that similar situations have been known, before and. have afforded the opportunity for fore-handed and far-sighted investors to lay the foundations for large future gains.” The foregoing recital of American trade tends to confirm our mid-May estimate when we concluded: “The American situation, therefore, while not yet conclusively showing signs of real recovery above seasonal demand, has several favourable features which are decidedly encouraging'.” Not only in America alone is to be noticed that tendency on the part of those who study the markets to recommend investors to contemplate purchasing stocks. It is generally considered that the up-trend in industry is preceded by about nine months by a forward movement in industrial shares, it is therefore distinctly encouraging to see evidence of a tendency to turn towards less conservative channels of investment in anticipation of profits to be made when the economic machine starts moving with a quicker tempo. The psychological factor in the present depression is a considerable one, and the fact that it is moving toward a. more healthy orientation is indeed gratifying.