July 9.
Tue editor of the ''Statist'' has contributed to the Journal of the Royal Statistical Society a comprehensive article dealing with economic conditions during 1920. Now it may seem rather late in the day for us to turn back to 1920, a year which we all know, brought endless disaster in its train, but its phenomena are of such a character as to repay their study especially at a time like the present. For just now there are hopes that we are on the verge of a trade revival, Li is only a few weeks ago that Europe seemed prepared to resume her consumption of raw materials, and in spite of the adverse conditions prevailing in a country, such as China, there were distinct hopes of brighter times in business. True these expectations have not materialized so far, but business men accustomed, to take tony views recognize factors in the situation which have been absent for many months past, and upon these base their _anticipations. It will be remembered that the year 1920 was one in which hopes of prosperity ran particularly high. As a matter of fact it opened with a condition of trade which seemed to indicate that the boom period so often predicted as bound to follow the war wad f¢eally with us. Prices were rising—until April. Then followed the "collapse of markets, and with it the appearance of all the evils which speculation carries in its wake.
Hopes of a long spell of good trade, which would do much to restore the damage wrought by the war, disappeared, and realization of the truth was forced upon the public that no real boom in business had ever taken place, shortage of commodities throughout the world at the date of the armistice and the haste with which the manufacturing centres of the world set about repairing it. Dealing with the critical period, the editor of the "'Statist'' thus describes the situation The boom reached its height by the beginning of 1920, and in the early months of the year many portents of the coming change presented themselves to the observant. In the first place, a marked slackening in consumption became evident. Though it was lost sight of during the feverish eagerness to increase the output of commodities, the broad truth was at last beginning to manifest itself that, as a result of the war-time destruction of wealth, our capacity for saving and our standard of living were on the whole lower than before the war. Accordingly, the amount of commodities required to meet current consumption, and consequently the amount which could find a ready market was less than in pre-war days. In this connexion it. must be understood that consumption refers not only to domestic consumption, but also to the foreign demand for our products. It is now clear that the rate of production required to support the real post-armistice standard of living was reached sooner than was generally anticipated.
This is the point to which attention should be given in thinking of the present state of affairs and the future prospects. Higher wages have.given the impression in many quarters of a better standard of living, even allowing for the depreciation in currencies, whereas it is here pointed out that taken generally it is the other way about. And having got this fact clearly before us, we must realize that nothing has happened within the intervening six months to change it. In fact the industrial troubles, the political ebullition thronghout Europe and in other parts of the world, have probably made' the situation worse in regard to this particular phase of the matter. year and more ago, Speculation has been brought to a standstill, deflation has made considerable progress, and now with the settlement of the coal strike in England and the adjustment of other disputes, there is reason to hope that Labour will be prepared to accept a reasonable part in this process of deflation. Granted this and a period of industrial peace, and we shall have made a very important step towards a return to normal conditions. Judging from the remarks made this week by Sir Edwin Stockton and Mr. Goodenough, Chairman of Barclays Bank, these conditions are in sight, else they would hardly have dared to predict a revival in trade as being within measurable distance. In their remarks, we find no suggestion of an approach to a boom period, but the tone of their statements ig all in the direction of a slow recovery, at first at least on moderate lines. Their conclusions seem to tally with those reached by the editor of the ''Statist'' that the power of consumption has been so reduced by the war that demand is to-day more readily met than previous experience had led us to believe. It is well to bear these conclusions in mind in looking to business for the future, for the interdependence of nations is liable to make it a worldwide phase. As a matter of fact we believe that the experience of the past two years has killed the inclination to conduct trade on a basis of rash Speculation, but in isolated cases there may be a" desire towards gambling to recoup for the heavy losses recently incurred. Should that feeling he present, the facts concerning the lower consuming power of the world should serve to modify its operation.
Text read from the printed page and cleaned; old type leaves the occasional error.