Evening star., 1933-10-22

pOrtl0naCe TcQuCClOL Ill tilc WcdltII avail
able for distribution in the form of in
come
The reduction in the volume of world
trade in the last three years Is stag
gering. In 1929 the value of world trade
amounted to about $4,000, 900 ,0o0 In
1882 it fell to about $25 100000,
drop of almost tWo-thirds.
This decline has not been distribute
equally over all count1 les. Great Britain
has suffered less than other countries,
but the decline OF her foreign trade has
been about one-half since 1929. The
countries which have suffered most are
those mainly engaged in the production
of primary products. The great fall in
the prices of such commodities, accom-
panying the reduction in the demand
for the products, has had serious reac-
tions on the trade of the industrial ma
tions The decline in the purchasing
power of agricultural countries has prac-
tically stopped their purchases OF manu-
factured goods.
The enormous drop in world trade has
led to other serious consequences. Thirty
million workers have been thrown out
of employment This has further aggra-
vated the position by Withdrawing the
normal purchasing power of these unem-
ployed.
The loss of two-thirds of the former
world trade has caused serious budgetary
difficulties in most countries. 1t is diff
cult to reduce national expenditure, ex-
cept slowly, because the state is COM
mitted to obligations it must meet. State
expenditure is based on an estimated
income at a time when foreign trade
was two-thirds greater than it is today.
National revenue comes from trade, and
when trade falls off the yield of taxes
declines The state, in such circum-
stances, must either reduce expendi-
lures, which is difficult; or it must in
crease taxation, which is intolerable
when individual incomes have fallen so
heavily; or it may leave its budget un-
balanced and go into debt
Most countries have adopted the last
course. Most countries have heavy budget
deficits which they have not had the
courage to meet either by reduced ex-
penditure or by additional taxation. An
unbalanced budget is regarded as sign
of national insolvency, and judged by
that test many countries today are in
state of bankruptcy
When a country has an unbalanced
budget it is not meeting some of its
OBLIGATIONS and its credit suffers. There
is always the danger that it may default
on it's public debt The effect of an unbal-
,,,%1 %1,oy rot
quotations of foreign bonds of countries
whose budget is in an unsatisfactory
state. The credit of France, Italy, Ger
many and Japan, for instance, is lower
than that of Great Britain, which can
borrow at " per cent, while these other
countries, if they could borrow at all,
would have to pay from AZ to 10 per
cent while many of the smaller states
could not raise an international loan
at any price.
\A/HEN the trade of a country shows
wv progressive decline it is on the
road to both national and commercial
bankruptcy If traders business has
declined by two-thirdS in three years
he is not far from the bankruptcy court;
and so it is with world trade. The
stark fact is that unless the rapid de-
cline can be arrested, and the tide re-
versed, world collapse is inevitable.
The effect of the trade depression is
to be seen in the fall in the market
values of the shares of many of the
industrial companies, as well as in gov
ernment stocks of foreign countries.
That is, in effect, the anonymous con-
fiscation of capital. In recent years
millions of capital has been'written off
industrial companies. and still many of