Evening star., 1947-10-05

Some Deflation Signs
While the imitation spiral has not
yet caused grievous wounds In the
nations economy, fiscal experts see
1947 as a year Of decision. The
Central Bank warned that unless q
prompt and adequate remedy can
be applied to the problem Of in
adequate production, Venezuela
might be in for future crisis.
Panama:
!. Some Of the wartime boom air
already is kissing out of Panamas
economic balloon, but although some
definite signs Of deflation are visible,
real estate. the principal form Of
investment, still is sky high. Finance
men say land values are all out Of
proportion to present and prospec-
tive returns.
One factor in the economic picture
common to Panama and the rest of
Central America is the enormous
reduction in United States spending. |
In 1914 alone, for example, the
United States spent SLIT 900, 900 in
Panama and, similarly, in Costa
Rica there were 40 American mis-
sions operating simultaneously.
Demand for employment was 10
high-in Panama at least-that
entire families earned salaries from
wartime construction financed by
the United States. All that has gone.
Figures released by the Panama
Canal and the United States Army,
the two principal spending agencies,
showed a reduction of 11,000 en-
ployes for the fiscal year 1861.
Money and Goods Scarce
Brazil:
Imitation continues to plague
Brazil where both money and goods
are scarce. Brazil's wartime exports
to the Allies left credit balance of
$3.50, 100000 gold value which is
frozen, much Of 1t in England.
Thus, although Brazil needs ali
kinds Of industrial goods, especially
transport, 1t does not have the
cash for imports and many business
projects are at standstill.
A recent government order halted |
the importation of so-called luxury
goods in an attempt to obtain es-
sential items and combat hourishing
black markets.
Bank loans are being strictly cur
tailed after a long period of liberal
credit terms, and building thus is
slowing down considerably.
Lack Of transport equipment pre-
vents Brazil from shipping food
stuffs and other goods within the
broad stretches of Brazilian terri
tory. For this reason, even though
some interior areas have meat, rice,
beans or other items, other sections,
including the big cities Of Rio de
Janeiro and Sac Paulo, can't obtain
these items. There is no regular
rail shipping, only coastal ship
traffic.
Rents and prices still are climbing
and already have far outdistanced
wages. American automobiles still
cost four times United States CELL
ing prices and cup of coffee, held
to the equivalent of one American
cent all during the war, has ad-
vanced 50 per cent and some cafes
have abandoned selling 1t although
Brazil has the worlds largest coffee
crop.
War Hurt Peru's Trade
Peru:
A black market in foreign cur
rency created by difficulties in pur-
chasing dollars in the early months
of 1916, skyrocketed when the gov
ernment froze all balances in foreign
currency held by private persons
and commercial concerns in July,
1916.
. The government took this step
when the national dollar reserve had
dwindled dangerously. But despite
restrictions established to obtain
dollars at the official rate, set at
$50 soles to the dollar, people are
eagerly buying dollars on the free
market" at up to Is soles each.
World War II deprived Peru of
the markets for sugar and cotton, its
principal export trade.
Peru also exports fuel oil and its
by-products and copper, silver, zinc
and other metals, but the oil wells
and mines belong to foreign con-
Germs and the bulk Of their export
proceeds remain abroad.
Imitation in Peru started in 1914
when the government inflated It's
own budget dangerously to meet
expenses and at the same time in
VI CdcCO Vic AlolllOCl VI Cl41pAOy co, 2o9
political reasons or to avoid un-
employment. To meet a shortage Of
funds in the national treasury the
government borrowed from the Cen
trail Reserve Bank, which was forced
to issue more paper money.
Although a law passed in 1882
provides that the gold backing of
the Peruvian sol must be at least
81 per cent, it has now dropped to
less than per cent. When the
government increased salaries to
meet rising living costs, employers
naturally increased their prices and
the vicious circle has been spirahng
upward ever since.
With the sol worth less every day,
capitalists started buying dollars and
real estate for investment, creating
the currency crisis and increasing
land prices fourfold.
The government established a
price-control system which, however,
does not work efnciently as it can
not hold down prices Of MANY basic