The recession in America has beea largely attributed to excessive inventories built up at a time when prices were expected to go sky-high; and these redundant stocks have proved very dificult to liquidate, Neverthe less, stocks of tyres have been reduced by nearly 20 per cent. since the peak in the Spring last year. This has only been made possible by a drastic cut in production, which is now running at 60 per cent. of 1937 and lower than at any time in ten years. Similarly, the production tears has been reduced to 60 per cent. of last year, less than at any time since 1934, The equipment of new cars is more important to the industry nowadays than In the past; along with greater durability and reduced replacement demand, more and more rubbers going into the body of the car, The big manufacturers regulate their production to a large extent by their well-informed estimates of current When recovery does come it would be unreasonable to expect a quick rise in the price of rubber for the consumer is in a very strong posi tion to resist an advance. 'There are likely to be frequent reactions surplus holdings come on the market and only when world. stocks are once more at a lower than five months' ratio to consumption will rubber regain its high estate, Prospects for Shares For the time being, therefore, the Joutlook is not promising for ' the holder of rubber shares who must be prepared to see not only a cut in dividends but also. the complete elimination of profits in companies with high production costs. All costs; in any case will rise as production is further restricted. Labour cannot be turned off and on like a tap and over= head costs are more or less fixed. A. smaller turn-over with rising costs is the near-term outlook. Fortunately, most Shanghai companies—not all—[should be able to ride out the storm without actual loss at today's low prices, so investors need not feel unduly alarmed. Those who had the prudence to buy only low-cost ducers are now getting their reward, Even though good dividends are not in: view, rubber shares are worth holding as the most dependable profection against the currency deprecia tion which is now in process here. While the effect of this depreciation Jon local industrial shares is open to debate, there can be no doubt that rubber shares, though expressed in [Chinese currency, are an investment in an equity abroad and their real value cannot be affected by currency fluctuations. They are in the fortunate position of being able to sell their [product in a sound and stable form of money and such dividends as may be earned will be distributed as a [correspondingly larger sum of Chinese currency. requirements and the weekly cabled Agures may usefully be watched for an indication of an impending change in the outlook. At present they offer encouragement, There is no reason to expect an early improvement in the United States. Conceivably, the Autumn may repeat the failure of the Spring to stage a revival, though the odds are against such a pessimistic view. The ow spending programme is bound to. begin to make its effect felt by then Valuable New Zealand Orders for Britain London, June 17.
Contracts valued at £154,000 have been placed with British firms for' engineering material by New Zealand. The largest single order is for railway buffers, totalling £40,000, ordered from Lanarkshire—Reuter,
Text read from the printed page and cleaned; old type leaves the occasional error.