THE TRADE POSITION AND HOW TO HELP IT.
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The Encouragement of Purchasing is Suggested as the Practical Way of Reviving the Commercial Vehicle Industry.
Sturm ey. By Henry
THE commercial motor industry, perhaps even more than most other industries in the country, has been passing through a troublous time lately, arid the clouds have not yet entirely rolled by, but I think the silvery lining is beginning to be seen, and, •whilst trade will improve as the year rolls on, we can all do something towards help
ing it to do so. . When we look at the position of the whole world to-day it must be admitted that it is unprecedented. It is, in a sense, anomalous, because we find that, whilst this country, which won the war, hasbeen, and is, suffering from a state of unemployment and bad trade previously unthought of. Germany, which lost the war, has but an infinitesimal number of its people unemployed, Moreover, it would also appear to he anomalous that in our country, where our international credit, as represented by the monetary exchange, has been steadily improving, until it has now very nearly reached par, we arc suffering from this period of bad trade ; whereas Germany, with her exchange " gone to pot.," is apparently prospering..
An examination of -the conditions, however, will show that, in reality, both these phenomenal occurrences have a perfectly natural cause and effect. If we take Germany's position, we shall find that, although we hear much talk about the low rate of exchange enabling Germany to cut us out in foreign markets and to do a large trade, as a matter of fact, German exports have, since the war, not been of an exceptional character, and that the extreme prosperity—temporary, as I shall show—is, in the main, due to the home trade.
Let us see what has been happening. When the peace was actually signed with Germany the pound sterling stood at about 250 marks, and Most people thought that the mark would then quickly recover its value in international exchange ; but, owing to monetary inflation through the lavish issue of paper money, the value of the mark, instead of improving, has steadily, and latterly rapidly, slumped, until the sovereign to-day will buy about 35,000 of them. This meant, of course, that. prices in Germany—in marks—rapidly ascended concurrently with the fall in the exchange value, with the result that wage earners and everyone else who had money, however little, to spare beyond that required for necessities, bought something with that money, feeling that, as the value of their money was rapidly depreciating, it would be folly to keep it, whereas the intrinsic value of goods purchased would remain, and would vary in mark value with the exchange.
Why Germans are Exchanging Marks for Goods.
So, for the past 12 months and more, everybody in Germa.ny has been buying things—not because they wanted them, but for the reason already explained, and the result has been that German manufacturers and shopkeepers have been as busy as bees, and money has been circulating freely.
On the other hand, if we examine our own posi' tion, we shall find that, during the same period, the currency has been steadily stabilizing itself, with the consequence that the value of the pound sterling —unlike that of the mark—has been improving. In other wards, prices have been falling from the excessive immediate post-war point, -with the result that, instead of buying things they wanted, everybody has said to themselves, No, we will wait.
Things will be cheaper later on." Instead of spending their money buying things, those who have had surplus _money have been hoarding it or investing it in gilt-cdged securities. In other, words, there is as much actual money in thecountry to-day as there was during the period of the post-war prosperity, but it has not been circulated, because people have not been buying, and this cessation%f buying has resulted in much of the unemployment and bad trade which are rife to-day.
What is wanted, therefore, to improve trade and to lessen unemployment is for firms and individuals once more to buy those things which they are _requiring, and so to set money into circulation again. As I have said, the reason they have been holding off is that they have been—and still are—waiting for goods to be cheaper. But I think we can take it with a fair amount of certainty that to-day prices for most things are about as low as we may reasonably expect whilst the present high taxation remains—and it must remain for many years yet, without any very great reduction. The trend of prices may, henceforth, be expected to be upwards instead of downwards, and therefore it will be more advantageous to buy now than to wait longer.
The Portent of Rising Prices in America.
Another reason which leads nte to believe that we are at the bottom of -the hill, so far as prices go, is that I have noticed, in the inevitable recurring booms and slumps of the past, that America has always led in each direction by an appreciable period of time, and advices from America show that prices there are now once more on the up-grade. For exMamie, I had a letter recently from an American tubber manufacturing house, in which they pointed to the fact that, whereas six months ago they were working with 15-cent (per lb.) rubber, they were now working with 24-cent rubber, and the price was expected to go up to 30 cents. Since the receipt of that letter a month ago •I notice that rubber has advanced to 26 cents, and, as a consequence, prices of rubber goods have already commenced to advance over there. We may expect with the opening of the spring trade an appreciable rise in the prices of tyres and rubber goods generally.
A letter just received from a large component house advises a 5 per cent. advance, commencing with. January, in the prices of all their products, the reason for the increase being stated to be "The increased cost of malleable iron castings, grey iron castings, seamless steel tubing, bar steel, drop forgings, and all other parts into which pig-iron enters." It is plain, therefore, that American prices are to-day firmly on the up-grade, and this will inevitably be followed in the near future in the corresponding industries over here. I feel assured that there is no longer any reason why orders for goods, however small, should be withheld, and if therefore, individuals arid business houses throughout the country, not only in the motor industry, but in all trades, will buy the things they require, hut which they have been " doing without " for the reasons abovementioned, we shall once more feet money freely into cireula.tion, and the buying habit, which was crushed by the slump and _particularly by the coal strike, will be resumed. When this point has been reached businesS will haye some chance of settling down into something like its old routine and stability, arid then trade throughout the country in every direction will improve and the unemployed will be absorbed.