The Wanganui Chronicle. SATURDAY, AUGUST 15, 1931. PRIMARY COUNTRIES AND RECOVERY

Wanganui Chronicle, Volume 74, Issue 192, 15 August 1931, Page 6

The Wanganui Chronicle. SATURDAY, AUGUST 15, 1931. PRIMARY COUNTRIES AND RECOVERY

PRESIDENT HOOVER is reported to have proclaimed that countries producing primary products will be the first to recover, and that therefore Australia will recover before the United States of America. Some New Zealand newspapers seem to doubt this prospect; they need not do so, however, because it is a well-established fact provable by past experience. The immediate result of an up-turn in prices is felt in foodstuffs because the retail traders buy short. In the provision trade the retailers try to turn their butter stocks over twice in one week. Any improvement in demand therefore re-acts at once upon the market. There is no time Jag between the improved demand and a rise in prices. In the realm of raw materials for industry the advance in price is brought about by manufacturers buying right up to the limit of their firm orders. This stimulates an upward movement which in turn creates a tendency to buy ahead of the order schedule. Again, prices may advance for raw materials because of the competition to make sure of supplies, but the price of the finished product would not advance in a like way. The reason for this is that wages do not immediately become adjustable to the higher level, nor do rent and other overhead charges. It is for this reason that a period of rising prices favours primary producing countries, while generally speaking a period of gradually receding price levels best suits a manufacturing country, and particularly the wage earners of a manufacturing country. The gradual price decline is taken care of by improvements in industrial technique, wages, and profits, prices for raw material remaining fairly The gradual recession in prices is indeed the best of conditions because it spreads the benefits of progress without dislocation. The present condition is, however, subnormal and in the return to normality the primary producing countries cannot help but be in the van of advantage.