"What it needs is a delicate equilibrim between the prices of fabricated goods and raw materials, of wages on the one hand and industrial profits on the other and it is the violent disturbance of these and other essential balances and adjustments that leads to depressions and universal distress. Phese dislocations can originate in industry itself or in conditions in the commodity markets such as a glut of supplies, or they may be of financial origin, The inter-relation between industry and the commodity markets is "thus close and only little less so with finance. and the security markets which reflect financial conditions.
All three aspects of the business world require consideration in any attempt to treat the subject adequately.
Recovery. from Great Depression Less than! a year ago the. world was on the flood tide of prosperity Beginning late in 1932, recovery from the Great Depression had spread from country to country and, though uneven in some spots and abortive in others, the broad fact was indisputable. As measured by the League of Nations Index, world industrial. production had risen from an average of 69 in (1932—100) to 1217 in December 1936. The volume of world trade, in spite of all the barriers raised against the free movement of international commerce, rose from an average of 745 in 1932 (1929.—100) to 100 in June 1937. The world. as a whole was definitely out of the depression but the pendulum had not yet swung to the other extreme. If signs'of a boom could: be discerned it had not: yet N is not surprising therefore tha' the hurricane which has since swept through the stock and commodity markets and, in a lesser degree, the industrial world was forecast by no one. The significance of the setback can be judged from a few typical figures from sources of recognised standing. The "New York Times" index of United States business activity fell in four months August 26 to December 27 from 11L2 to 84.6, about as much as in twenty months following the 1929 boom. Steel production, in roughly the same period, dropped from 85.5 per cent. of capacity to 192. The Dow-Jones index of commodity prices stood at 82.44 on March $1 and at 5203 eight months later: industrial shares dropped from 194.40 on March 11 to 113.04 on November 25. These figures refer to the United States where the decline has been the most severely felt, and though well cut of step with what has happened elsewhere show clearly enough that we are in the midst of a recession of major importance, if not, indeed, on the thresh-old of another great cept ion.
Text read from the printed page and cleaned; old type leaves the occasional error.