METALS INDUSTRY

Wanganui Chronicle, Volume 83, Issue 2, 4 January 1939, Page 11

METALS INDUSTRY

RECENT CHANGES IN CURRENCY INFLUENCES UPON MARKET The broad influences of currency changes on the metals industry during the last decade are discussed in a review of base metal conditions made by the British Metal Corporation, Limited, London. The conclusions reached are that the weight of currency depreciation against sterling has been much heavier than that of currency depreciation, and though counteracting forces (increases of costs and so forth) have doubtless worked strongly, it seems clear that the net direct and long run pressure on sterling metal prices of the currency' changes over the period has been downward. Referring to the output restriction schemes, the review points out that there has been an effective Governmental tin control scheme since March, 1931, and a non-official but effective, agreement to limit copper production since March, 1935. There has also been a zinc cartel, which regulated output, though somewhat more loosely, up to the end of 1934, and there is now a recently-formed association of lead producers. The tin and copper schemes have regulated the output of metals in those countries which adhere to them. Moreover, currency depreciation, by stimulating output, has undoubtedly tended to intensify the degree of restriction which has been deemed necessary. Restriction schemes may thus provide an important offset to the effects of currency depreciation on output, , but they do not, of course, upset the conclusion that currency changes, all over the world have, on balance, worked directly to lower sterling prices. In addition to this direct influence, the review adds, currency instability and exchange control have undoubtedly caused a general cramping of world trade, and, therefore, a contraction of world demand, which must have lowered prices of commodities and goods in general. But the effect has been uneven. In a world in which, in several parts, guns are officially preferred to butter, more non-ferrous metals and fewer other commodities have been absorbed. Restrictions on foreign trade in several countries have, in fact, provided the mechanism—by which essential war materials have been accumulated and other goods excluded. The effects of currency instability cannot be taken alone. Special study of them, as of the effects of other major economic factors, however, helps to explain more fully the complex development of the nonferrous metal industry.