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, These dislocations can originate in industry itself or in conditions in the commodity markets such a3 a glut of supplies, or they may be of financial origin. The inter-relation between Industry and the commodity markets thus clove and only utile less with finance, and the security markets which reflect financial conditions.
Alli 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 iwas on the Mood 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 60 in (4929=100) to 121.7 in December 1936. The volume of world trade, in spite of all the barriers raised against the free movement of "international Semmerce, 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. developed so that a period of _continuing prosperity was the common anticipation, It is not surprising therefore that the hurricane which has since swept through the stock and commodity markets and, in a lesser degree, the industrial world was forecast by no tone. The significance of the setback can be judged from 0 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 1112 to 84.6, about as much as in twenty months. following. the 10929 boom. Steel production, roughly the same period, dropped from 855 per cent. of capacity 192. The Dow-Jones index of commodity prices stood at 8248 on March 'SI and at 52.03 eight months later:
industrial shares dropped from 194.40 on March 11 to 113.64 on November 25. These figures refer to the United States where the decline has been the most severely felt, and though well out of step with what has happened elsewhere show clearly enough that wwe are in the midst of a recession of major importance,. if not, indeed, on the threshold of another great
Text read from the printed page and cleaned; old type leaves the occasional error.