AMERICA’S PLIGHT.

Waikato Times, Volume 110, Issue 18378, 11 July 1931, Page 10

AMERICA’S PLIGHT.

FINANCIAL PANIC!

THE SITUATION SURVEYED.

ABILITIES OVER ESTIMATED. As measured by Industrial output, expansion of employment, Increase of wages, salaries, and profits, America (United States) has made more progress than any other country in the last sixty or seventy years; but about twice In every decade that country suffers a sudden and serious slump. The ups and downs of America are big and sensational. America to-day Is in her third, and worst, slump since the war. There is no mystery about it. There has always been something unsteady about American business. There has invariably been lack of caution. The Americans often deceive themselves. Because they have had a huge country, immense natural resources, high commercial ambitions and high-speed labour, they seem to think that nothing is too difficult or tremendous lor them to accomplish. Thus _ they speculate wildly, they over-estimate their abilities, under-rate the powers of their competitors In small and old countries —and they over-reach themselves from time to time. They fail to understand that mere bigness in area, resources, or manufacturing capacity, is not real competitive strength. Compact Britain, compact Germany, compact 'France, and even tiny Belgium can beat the vast United States in more trades than one.

A Boast That Failed

Thirty years ago, when they formed the United States Steel Trust, Americans told us without reserve that they would “lick creation”; that they would make and market the cheapest steel in the world; and that they would “annex the world’s export 'business." They spoke and wrote of Britain and other countries as being on the verge of economic collapse. They did their self-boosting so successfully that one of the most noted of British journalists wrote a book to tell us that we could not possibly stand against American competition in iron, in steel, in ships, or in any line that counted, and "our only hope of salvation was to make ourselves an American colony." Well, the Steel Trust got to work •promising great reductions in costs and a huge increase of export trade. Within ten years the cost of a ton of American steel had increased by 40 per cent., and the United States had fallen from a highly promising second place In steel exports to a very bad third position. Britain greatly increased her exports, and Germany almost shot ahead—she increased her exports by nearly 400 per cent. Today, after thirty years of Trust management—or what is now called “rationalisation” —on the grand scale, American shipments of Iron and steel pale into insignificance beside those of France, Germany, Britain and Belgium. In February, America, with a productive capacity great enough for 5,000,000 tons per month, exported only 80,000 tons, and maost of that was next-door trade with Canada. America is big in steel only because she operates her resources behind a high tariff wall. Under Free Trade conditions she would be swamped in her own market by imports of steel. A Nightmare of Losses.

It is also thirty years since the American Morgan Shipping Trust was formed to make the United States mighty In ships. The boastings were very loud and long. But in 1911 American shipping amounted to only one ton for every 18 British tons, and no profits could be made. When the Great War broke out America began to pour dollars by the hundred million into shipping and shipbuilding enterprises in the belief that European, especially British, shipping could be beaten. But In 1916 it was openly admitted In the United States Convention that ships could not be built so well or so quickly, or nearly so cheap, in America as in Britain. Private capitalists who had visions of great profits had a nightmare of Josses. Then ./the Government of the United States stepped in and declared that 18,000,000 tons of shipping should toe built in America and should make the American flag supreme on the seas. Very quickly 1,300,000.000 dollars (approximately £260,000,000) of taxpayers’ money was spent toy the Government on ships. Many hundreds more millions have been spent since the war; but no profits can be earned; practically every ship and every voyage results in loss; and the big scheme stands to-day a colossal failure. 'Hundreds of the vessels built were not fit to carry cargoes across the seas within a few years of being launched; hundreds of them have not carried a cargo for ten years; hundreds have been scrapped and hundreds more are offered for scrapping at much less than scrap iron prices. For the compeUtive oceancarrying trade only three cargo ships have been built in American yards in the last five years. Britain has built more ttian a thousand. An Extraordinary Depression.

The present slump in American trade is a slump out of the ordinary. America is still a great agricultural country. Farm produce has tumbled down in price and thrown the nation into something like financial panic. Hundreds of banks liave closed their doors. Tens of thousands of farmers are bankrupt. The coal pits and steel works are not operating at half capacity. Wages and other costs have been advanced to absurd levels, and It will now be a long and painful process getting American costs down to anything like economic figures. The export trade offers little chance for America now. Other countries can sell much cheaper. The home market cannot revive so quickly as in past times 'because there is no shortage of railways, bridges, houses or works lo make good. This will prove America’s longest and deepest depression.