TPUIS is the third of a series of articles on the above subject.
The first {wo appeared on March 16 and 23, and the concluding article will appear in next issue.
From 1932, when depression reached its depths, to 1935 stocks of commodities fell by 17 per cent. and in the first nine months vf 1936 by a further 12 per cent.; the accelerated pace of the decline was matched by the rise in prices, as shown by the Economist index (1927-100);—end December 1932 G1.1; 1935 71.4; 1936 79.8; the greater part of the rise being compressed into the last quarter of 1936, By the end of March 1937 the Index stood at 87.2.
Until the latter part of 1936 the markets had merely responded to the broadening demands of industry and the elimination of surplus supplies of practically all commodities. At this stage Great Britain announced her decision to re-arm, entailing the purchase of large quantities of raw materials; the gold bloc countries at last submitted to devaluation and the tri-partite currency pact between England, France and America came into being.
The commodity markets were ripe for the boom which immediately slarted and was accentuated by the incursion of speculators from all sides Including professionals who saw ho further scope for profits in me ternational currency operations. With consumption rising faster than pro duction, and fears of an impending shortage, the users of primary com= Inoditles were encouraged to contract For supplies far In excess of their customary needs; the short-term it~ resilience of supplies due to restric" Yon schemes and the impossibility Of forecasting the out-turn of crops that depend on weather conditions (ex, the drought in the United States wheat-growing States) precluded a quick response to the demand and With the turn of the year the market had. become' little better than a gamble, for which not the least justifection could be found in the long term trend of the relation between supply and demand,
Text read from the printed page and cleaned; old type leaves the occasional error.