The Current Business Situation
The Empire Club of Canada Addresses (Toronto, Canada), 10 Dec 1931, p. 297-318
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The Current Business Situation

Some general remarks about our economy now, and in the recent past. Repairs that need to be done to an ailing, but resurrectable economy. Reference to three or four special aspects of the depression which are important for an understanding of its nature and for the consideration of possible remedies. First, the world-wide character of the depression. The process of influence that has been cumulative. The measure of the international deterioration as summarized by President Hoover. Ways in which the world has become one. Current trouble emanating from our inability to reconcile stubborn nationalism with the economic forces that tend to make the world a single entity. A recovery that will call for international as well as intra-national remedies. A second feature of the present depression as the persistent and calamitous fall in the general level of wholesale prices. An analysis of the causes of this fall. A list of five factors primarily responsible for this declining trend: an increasing volume of world production of goods; a declining annual output of gold and the failure of the world's monetary stock of gold to increase at a rate commensurate with the rate of increase in the physical volume of trade; a substantial increase in the demand for gold for monetary uses which has come with the resumption of the gold standard since the war; the so-called maldistribution of gold; the perverse effect of gold movements upon the security markets in the United States. The immediate concern to us of the effects of this drastic decline in prices. Alternatives to what can happen now. A third aspect of the business depression: the special burden which declining activity and declining prices have brought to the agricultural classes and the agricultural areas, with discussion. Fourthly, the crisis in banking and credit which in the last six or seven months has supplemented the influence of declining prices in increasing the intensity and scope of the business depression. The immediate importance of the credit crisis for us, with discussion. The present and immediate future. Recent indications that the world panic, the crisis of confidence, is now apparently at an end for the time being. Changes which have come about in American domestic psychology. A substantial upswing in wheat and a number of other commodity markets, also in the bond and stock markets; reasons for this upswing. How we can hold the gains already achieved and capitalize a somewhat favourable opportunity. The need for statesmanship of a high order in operation in the international field. Three problems which cry urgently for solution: German reparations and short time credits; the world price and monetary problem; the problem of international trade policy. In addition, the problem of disarmament. A discussion of each of the first three follows. The situation in Canada. The special tasks immediately before us. Dealing with public finance. Finding a solution to our railway problem. Making an individual and collective adjustment to the new economic system that is to prevail during the next few years. Restoring sanity in our international relationships.