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The Papers of Eugene M eyer (m ss5 2 0 1 9 )
120 06 001-




Subject File, Federal Reserve Board, Reports - Economic Depression,
France & England, 1931

EUGENEMEYER




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D epartment of C ommerce
O FFIC E OF T H E S E C R E TA R Y
WASHINGTON

J u ly

Hon*

Eugene

G overnor,

Federal
D.

^dw ard

S w itze rla n d ,
C om m ittee
stu d y in g

and
th e

p re ss io n ,

U n ite d

R eserve

is

in

G eneva,

m e e tin g s

o f

th e

B oard

C.

M eyer:
M r.

e n clo s e d

1951.

M eyer

W a sh in g to n ,

D ear M r.

1,

has

E yre

a tte n d in g
o f

th e

course

report

on

th e

sp e cia l
and

asked

Hunt

me
th e

who

com m ittee

phases
to

o f

send

you

E co n o m ic

th e
in

E co n o m ic

w h ich

is

b u sin e ss

de­

co n fid e n ce

D e p re s sio n

th e

E n q u iry —

K in g d om .
I

th in k

you

w ill

fin d

it

p a rticu la rly

very

sin ce re ly ,

in te re stin g .

Y ours

S ecretary

to

E.

E.

H u nt.

RECEIVED
,n * 1931
OfftOlB OF

E .D .E .5 .

(a )

(M ay

1931)

ECOMONIC D E P R E S S I O N E N Q U I R Y *
U N ITE D K IN G D O M .
M em orandum

of

th e

London

and

C a m b rid g e

E co n o m ic

S e rv ice .

In tro d u ctio n
SUMMARY OE DEVELOPMENTS
1922

The
so lv e s
upset

it s e lf
by

c e rta in

cases

and

boom

p u b lic

on

In
ton n age

have

new

by

dem ands

th ou gh

sid e ra b le




of

was

no

e x p a n sio n

war

1 9 2 2 -1 9 2 9

restore

boom .

War

and

in

dem ands

ca p a city

in

th at

s tim u lu s

rendered

was

fo llo w e d

in

at

re­

e q u ilib riu m ,

co n d itio n s,

c a p ita lis a tio n

in d u stry
th e

th ere
th e

scrapped

of

su ffe re d
p riv a te
th e

was

th e

b a sic

had
•

m uch

ce rta in

in fla te d

w ar,

and

e a r lie r ..

con stru cted .
d e m o b ilise d

th e

a

change

firm ;

th e

c o n tin u a n ce

co n s id e ra b le
of

o b s o le te

To

cope

W o o le n
fo rce s

r e c a p ita lis a tio n ,,
of

to

from

of

in d u strie s

v a lu e s

by

1920.

d u rin g

th e

from

p ost-w a r

of

re p la cin g

w ere

B rita in

attem p ts

p ro d u ctiv e

e x p e cta tio n

been

yards

th ere

th e

1929.

G reat

T h is

sh ip b u ild in g

dem and
th e

th e

d estroyed

o th e rw is e

of

cotton

com pany

out

by

a n d /o r

of

th e

of

ce ssa tio n

e x p a n sio n

Thus

ca rrie d

th e

of

re su ltin g

redun dant.

in fla tio n

th e

account

e x p a n sio n

c a p a city

fu rth e r

th e

an

aggra va ted

an

in d u s tr ie s ,

by

in to

h isto ry

m a la d ju s tm e n ts

stim u la te d

th at

e co n o m ic

-

m e rch a n tin g

as

boom

sh ip s

w ith

th e
w ere

se ctio n

cotton ,
of

th e

b e in g

p r o fits .

re p la ce m e n t

c iv ilia n

w ith

stru ctu re,

flo ta tio n

of

te x tile s

for

in

of

w h ich

w ou ld

in cre a s e d
a ffe cte d

c lo th in g
th ere

was

in d u s tr y .

and
con­

B rie fly ,
w ith

p la n t,

rate

of

w h ich

m uch

w o rk in g

bore

no
In

by

th e

Ruhr

th en ,

of
in

w h ich
war

case

to
of

fou n d

was

tim e,

re la tio n
th e

1922

o b s o le te
but

a ll

e a rn in g
coal

o ccu p a tio n ,

B ritish

th e

and

th e

th e

G o ld

or

of

In d u stry

w orn

w h ich

ca p a city

at

stim u lu s

was

absence

fro m

out

o v e re q u ip p e d

by

th e

a cce le ra te d

was

ca p ita lise d

th e

d e fla te d

co n tin u e d

th e

m arket

at

v a lu e s

p rice

le v e l.

u n til
o f

a

m id -1 9 2 4

p rin cip a l

co m p e tito r.
The
in

term s

of

th e

th an

in

o f

paper,

exchange
th e

p ro d u ctio n

out

co n d itio n s
a

general

strik e

to

1927

saw

-

le d

in d u s tria l

to

som e

London

th e

to

le ft

in te rn a l

w o rld

o f

se cu ritie s

(b e tw e e n

v o lu m e

of

ca p ita l

issu e s,

crease

in

hom e




th e

th is

was
1

Taken

com pared

w ith

w ith

g o ld

on

to

th e

at

o f

a d ju s t
fe a rs

le v e l
of

p a rt,

becam e

th e

th e

of

of

in d u stry .

and

on

costs

of

apparent

in

1928;

a

T here
by

w h ole

a year

to

changed

as

a

next

th e

w h ole
th e
year

-

general

1924.

by

1930,

le v e l

caused

The

b a la n ce

a cco m p a n ie d

th e

fou n d

w ages

in d u stria l

on

h ig h e r

la b o u r

of

2 $ ).

p rice s

a p p re cia tio n

it s e lf

p r ic e s

and

a

in d u strie s

th e

fie ld

le v e l

p r ic e s

fa llin g

p rice s .

and

ch a ra cte ris e d

is su e s.

pace

export

e a rly

th e

in d e x

terest

and

w h ole

re v iv a l

th e

boom ,

th e

re g a in e d

keep

in d u stry

made

in

brought

coal

be

a lm ost

1925

w o rld

was

to

in

w ith

1926,

d u rin g

1920

and

th e

th e

o f

C a m b rid g e

year,

and

not

strik e

recovery

p o s itio n

and

it

o f

Som e m e a s u r e
th e

d id

e q u ilib riu m

attack

spread

fa ll

th e

attem p ts

S tandard

th e

th at

o f

of

to

but

so

rest

The

th at

retu rn

slig h t

was

an

th an

it

th e

of

fa irly

shares

rise

in

in cre a s e

a m ore
was

a ccord in g

to

rose

20$

fix e d

in^i

in

th e

p ro p o rtio n a te
best

good

year

trad e.

sin ce

in ­
th e

-

It
exports
to

had

1924,

th an

becam e
rise n

so

apparent

m ore

now w i t h

export,

so

th at,

tin u ou s

change

in

fica n ce

in

study

th e
Of

1913

to

w h ile
a

1924,

th e

th e

sam e

89$.

For

in

w h ole

(S e e

f e ll

of

fe ll

and

by
th e

but

had

1924

of

v a lu e ,

7 -| $

in

5$

in

fa lle n

v a lu e ,

fo o d

not

th e

rose

was

fe ll
a

m ore

con­
sig n i­

p ro b le m .
about

7 3 -7 6 $

of

pr g v io u s

w ith o u t

rose

and

B ritis h

p rice s

th ere

is

exports

a lon e

in

th e

hom e

58$

fo r

from

m a te ria ls,

produce

rise

was

87$.

7 0 -7 5 $ ,

and

w e e k ly

p rice
w ere

in

to ta l v a lu e

is

v o lu m e .

show n

by
of

rose

as

e a rn in g s

11$

in

f e ll

th e

p rice

in d e x e s

of

im p o rts,

im p o rt

re ta in e d
o n ly

goods,

and

7$.

q u a n tity .

B etw een
im p o rts,

re ta in e d

O ver

th is

p e rio d

th e

p ra ctica lly

had

Som e

sm a lle r

w h ich

term s

export

im p o rts

som ew hat

of

was

m a n u fa ctu res
in

v a lu e

goods

m a te ria ls

changes

th e

th e

w h o lse sa le

The

in cre a s e d
by

of

im p orted

exported

th e

m a n u fa ctu red

o ff
th e

had

of

in d e x

w h ile

steady.

changes

v o lu m e

general

20 $

fa llin g

e x e m p lifie d

p a rtly

m a n u fa ctu red

had

in cre a se d
change

p ro p o rtio n

in cre a s e d

1924

and

th e

sam e,

show ed

an

o f

60$

1928

a cco m p a n ie d

q u a n tity

in

th ere

by

m a te ria ls

w h ile

th e ir

and

regards
a

export

decrease

of

trad e,

1924

20$

v o lu m e

in

over

in cre a se

1913.

of

a
and

v a lu e

15$.
As




th e

fa lle n

of

th e

im p o rts

and

but

fa ll

p a rtly

years

of

p e rio d

im p o rt

g e n e ra lly

of

1928

rates

a g a in

p h y s ica l

in

of

are

In

and

average

show n b y

m a te ria ls

r is e

th e

w h ich

fo r

w ages

m a te ria ls

?/a g e

of

a

1924

w h ile

q u a lity

was

p r ice s

w e e k ly

The

exp orts,

67$,

55$

p rice s

u n em p loy m en t

p rice s

m a n u fa ctu res

17$.

as

fig u re s.

trad e,

B ritish

b ein g

p e rio d

16$,

15$,

tra d e

th e

in

le v e l

p o st-w a r

of

th e

M e m o r a n d u m N o •2 8 ) •

about

about

of

rise

B etw een
p r ic e s

term s

as

p rice s

p rice

th e

im p o rte d

M e a n w h ile
95$.

over

ju s t

im p ort

fa llin g

th e

goods

th at,

th an

a

3 *-

'4 ^

M a n u fa ctu red

f

- 4 goods

had

fa lle n

co n s iste n t

w ith

25$

B ritish

exports,

of

had

fa lle n
of

6$,

th e

fin ite
b ein g

ca p a city

1929
of

coal

9$,

a rise s

one

rath er

th e

have

p ro b le m s

of

G reat

in

th e

w o rld -w id e

in cre a s in g

and

in

pace,

a lth ou g h

in co n s is te n t
th e




situ a tio n

th e

u n em p loy m en t

w ith

p ro s p e rity

rig h t

E xports

p h y s ica l

1913

le v e l,

in cre a s e d

in

at

a

had

a lth ou g h

th e

m e a n tim e .

le v e l

show

1928

slig h tly

sig n s

o f

de­

in

v a rio u s

in d u strie s

p ro d u ctio n

in d e x e s

and un­

a p a rticu la r

case

of

of

th e

G roat

th ese

th e

cy clica l

th e

in

w h ile

of

q u a n tity

was m a in ta in e d

13$,

v a lu e

th e

th e

had

th e

goods

over

se cu rity
o f

of

are

m a n u fa ctu red

H ow ever

82$

d e p re ss io n

o f

o f

in

q u a n tity .

ou tpu t

B rita in .

case

8$*

in

in

th rou gh ou t

one

v a lu e

10$

sta tis tics

s ig n ifica n ce

been

o f
5$

fig u re s

im p ro v e m e n ts .

th e

of

o f

These

m ark et.

ou tpu t

p e rio d

in

hom e

fa ll

in d u stry

stoel

th is

v a lu e .

but

in cre a s e s

p e rsis te d

th e re fo re ,
to

of

a

The

Trade

year,

sim ila r

was

cip a te d

F o re ig n

show

th e

cu lia r

th e

re v ie w

was

about

in

th e

in cre a s e

B ritish

fig u re s

w h ich

-re co g n ise d
ls . '

o f

o n ly

13$,

a

an

44$

fo r

in cr e a s e d

iro n

em p loy m en t

ten t ,

by

was

p re v io u s

im p o rta n ce

p e rio d

th ere

p ig

In
of

1928

had

B ritish

th e

rise n

co n s id e ra b ly .

v olu m e

im p ro v e m e n t,

e m p loy m en t

haps

o ff

m a n u fa ctu res

In
th at

and

and

p ro d u ctio n

a cco m p a n ie d

w h ile

p ro d u ctiv e

above

1924

fa lle n

exported

v olu m e

sta tio n a ry

B etw een

coal

in

th an

p o in t

of

B rita in .

years
of

The
th e

m ovem ent
was

a lth o u g h

th e

boom ,

a lth ou g h

general

newer

in d u s tr ie s

sou th ern

co n d itio n s,

th e

h a lf

at

w h ich

o f

p riv a te

S tock

a

th e
and

abnorm al un­

To

o v e rla id

Thus,

and p e r ­

im p re s sio n

e x p a n sio n .

general
u p tu rn ,

gave

in te re st

by

a

la rg e
is

pe­
p a rti­

p rod u ction

cou n try
p u b lic

ex­

now

th e

m arket

fa ir ly

th at

was

ra p id
was
v ie w

not
of

- 5 -

up

to

th e

w ou ld

end

em erge

of

1929

from

from

and

s u p e rim p o sitio n

a lrea d y

W h ile
a

situ a tio n

it

le v e l

depressed

th rew

p ro b le m

a

new

w h ich
lig h t

A lth ou g h

round
upon

from

. fig u re
w h ich

based.

of

was

one

it

a

m on eta ry

sym p tom

d e p re ss io n

as

th e

rates

expected
a

la te
to

d ra s tic

A r ch iv .,




to

1929

open

or

a

w h ich

of

th e

re co g n ise d ,
was

so lu tio n
as

a

a p p a re n tly
shock.

m ovem ent
at

The

th e

created

sam e

tim e

u n e m p lo y m e n t

u n em p loy m en t

w h ich

in

years

th e

of

th is

to ta l

cu lm in a te d

in

trad e
to

ahd

of

as

p ost-w a r

For
th e

recovery.

of

th is

rem oval

It

was

in

a

but

and

a h a lf.

m on eta ry

fa cto r.

as

a

not

th e

fa ll

h a n d ica p ,

fa ct

th e

as

fa cto r

circu m sta n ce s

a

be

cy clica l

was r e g a r d e d

reason
of

sh o u ld

m illio n
th e

th e

a m axim um

w h ich

one

1929

as

p ro b le m

in d u stry ,

sp e cia l

stan dard.

to

in

la te r

accepted

a m in im u m u p o n

fu rth er

w e lco m e d

way

th e

sta rtlin g

was m i s i n t e r p r e t a t i o n

g o ld

th e

on

p o s itio n .

of

c o n te m p la te d

co n ju n ctu re

u n e m p lo y e d

r e v e a le d

a ttrib u te d

was

not

was u n p r e p a r e d ,

n atu re

b e in g

r e lie f

th ere

th e

cou n try

p o s s ib ility

was

a

th e

p o in t.

su p e r-im p o s e d

was

as

th e

p re v io u s

m illio n

is

th e

th at

A rticle

account

years.

of

by

G .M .

W o o lle n

W ood
and

in

C urrent

W oosted

in

m oney

and

in d u stry

in

was

precu rsor

N o .W e ltw irts c h a ftlic h e s

E xport

in

such

setback .

See

ten

and

in

hope

d e p re ss io n

cam e

cou n try

ov e r-e x p a n sio n

retu rn
in

tu rn

was

strin g e n cy

o f

w o rld

ch ro n ic

for

S im ila rly
The

th e

th e

th is

1 9 2 2 -2 9

e ffe ct

d e p re ss io n

on

th e

a ctiv ity

econom y

th e

th e

schem es

In

of

on

C e rta ih ly

e x istin g

abrupt

illu s tr a te s

p r e v a ile d

of

B ritish

th e

fo r

con cen tra ted

d e p re ss io n .

d e clin e
th e

th e

a

was

past

o f

-;6-

In flu e n ce

of

R e g u la tio n

p rice s

A lth ou g h
d u rin g

th e

past

re sp o n sib ility
L a ck in g
ra is e

th e

of

but

th e

th e

th e

of

th e

S teven son
.e ffe cts
w h ich

appended
The

m ent

fix e d

to

ou tpu t

enough

to

can

o n ly

record

th a t

Y o rk s h ire * *

are

to

keep

orders

u n fille d .

sp e cific

Chap,

** A




grades

2 S e ctio n

R ep orts
d is tr ic t

Q uota

an

o f

b:

coal

is

of

th em .

in

to

to

ce rta in
th e

have

B a lfo u r

been

re s p o n s ib ility

fu lly

agreem en ts

d e s c r ib e

J .W .F .

schem e

by

Row e

th e

th e
it

on

(a

fo r

-

and

th e
its

copy

are

of

its

e ffe cts .

In dex
and

h ou seh old

been

d is tr ic t
to

th ey

fin d in g
be

G overn­

not

necessary

a lw a ys

M etal

th e

has

B a rn sle y

is

In d u stry

q u a lity

of

qu ota* w h i l e

cannot

o f

w h ich

co a lfie ld

in

th at

Survey

h ig h

g iv e n

r e strictio n

h ou seh old ers

C om m itte e

m in in g

to

any

p o s sib le

account

seem s

fix

costs

been

is

th e

o b s e rv a tio n

w ith in

of

to

e x iste d

P o o l,

accept

each

co lle r ie s

A lso

An

in d u stry

T h is

fo r

p e rm it

ou tpu t

not

have

re p o rt).

c o m p la in in g

la b o u r

d iffic u lt

agreem ent

ou tp u t

C oal

qu otas

has

M em orandum b y

th is

agreem en ts

m a n u fa ctu rin g

R a il

how ever,

sa le s

p rice s.

su cce ssfu l

and

tra d e.

it

S teel

S teel

sa le s

general

of

w o rld

and

th e

present

lo n g

*

a

R ubber.

in

in g

fo r

ta r iff,

m u st,

co n s id e re d

is

of

Iron

fo r

in

le v e l

d is a s tro u s

schem e

is

to

and

h ig h

In te rn a tio n a l

m ost

it

above

o n ly

B rita in
one

th e

p rice s

in

ou tpu t

years,

a ssista n ce

a sso cia tio n s

th at

ten

o u tpuc,

o b s ta cle s

v a rio u s

fo r

in te rn a l

R ep orts*,

and

of

P art

T rade,
co a l.

of

have

orders

fille d .

to

One

d is m is s

s t ill

th at

w ork­

IY

1928,

-7-

The
b u ild in g
of

th e

of

trad e

e x iste n ce

m a te ria ls

h ig h

cost

u n io n

trib u tin g

p rice s

w id e

has

are

been
are

so ld

at

in

to

th e

fix e d

area

is

Seo

areas
such

rates

a m arked

is

p ro b a b ly

in

fe a tu re

re fle cte d

o f

a

to

have

th e

p rice

of

as

th e

cause

but

th e

r ig id ity

e q u a lly

th e. f a c e
of

case.

a ctiv e

The

in

a

con­

h ig h

to

E v id e n ce
C ou rts,

and

fo r
of

but

th ere

re ta il

trad e

in

a

is

a s so cia tio n s
a s so cia ­

branded

to

fro m

m a rg in s

Such

approaches

th e
a

goods

m a n u fa ctu rer

re ta ile r

boycott

of

h is

who
goods

arranged.
d is trib u to rs

m a n u fa ctu re rs

rem oval

such

im p o ss ib le

p r o fit*

m a rg in s.

refu ses,

no

decade,

is

gross

s u p p lie s

m ay b e

and

past

d is trib u tio n

it

lo ca l

h ig h

in d u stry

b la ck liste d ,
dem anded

H ig h

re fu se

a s so cia tio n

fa llin g

u n d erta k en ,

r e ta il

m ra u fa ctu re r

of

e sta b lis h m e n ts;

a s so cia tio n

h im

th e

shops

been

th ese

a u to m o b ile

b ein g

re ta il

m a in ta in

th e

th e

o f

w h ich
is

census

costs,

I f

th e

p rice s

overhead

in d u ce

are

r e ta il

redundancy

to

lis t .

o f

th e

p ra ctice s

ana

an

E n q u iry

o b s ta cle

to

trad e

in to

is

se llin g
m ay

b e low

su p p ly

d is trib u to r

fro m

o b ta in a b le

fro m

R e s tra in t

o f

T rade

m ade.
A

*

wage

of

th e

b e fo re

b e in g

cou n try,

absence

p rice s.

of

fin e s

b la ck

oases

has

p a rticu la rly

p rice s

th em ,

and

th is

th e

a lle g e d

p ro fits .

form ed

In
lis t

o f

been

cover

p rice s .

th e

in

been

abnorm al r e t a ile r s *

th at

w h o le sa le r

cuts

a

sm a ll

doubt

tio n s

or

of

needed

have




th e

d em on strate

lit t le

b u ild in g

m a rg in

In

surveys

c o n tro llin g

fre q u e n tly

r ig id ity

c o s t s r a t h e r th an

to

R in g

cause.

w h olesa le
th e

of

a

re g u la tio n s

The

but

has

o f

7.

fu rth er

R.

D u n lo p ,

"R o to il

P ro fits "

has

been

H con.

th e

re s tr ic tiv e

J o u rn a l,

3ep t,

1929%




- 8 n atu re

of

a lle g e d
in

th e

The

Trade

r e g u la tio n
case

w id e

of

th is

re g u la tio n s.

of

d a ily

ou tpu t

b rick la y e rs* ),

scope

c o n trib u to ry
but

U n io n

of

th e

w ill

be

to

R IG ID IT Y

In dexes

o f

P rice s

th e

d e a lt

1925

in

la id

has
of

next

per

been

se ctio n ,

in

F irst

Q uarters

of

of

1925

-

100.

R e ta il
C ost

o f

L iv in g

101

9 9 .4

W ages

P rice s
Food
102

1 0 0 .5

96

1 0 0 .5

9 2 .8

8 6 .3

98

192*7

9 0 ,8

8 2 .9

97

9 4

101

1928

9 1 .5

8 1 .1

94

92

100

1929

8 9 ,5

8 0 .5

9 3 .8

9 0 .5

8 0 .7 ’

7 4 .8

92

8 7 .5

9 8 .7

6 7 .4

6 2 .2

86

78

98

3 7 .2

15

24

1931
F a ll
6

3 8 .2

o f

wage

of

years,

caused

rates

by

sta p le

T h is

and

im p ro b a b le
o f

th e

U n em p loym en t
was

not

been

seen
had

re q u ire m e n ts.

la b o u r

has

fo rce

a lw a y s

th at

in

fo r

th e

th e

grea ter

d e n ie d

to
has

to

by

a

ia

over

im m o b ility

of

num ber
la b o u r

Schem e.
sum m ary

p rod u ctiv e

been

th ese

th e

2 .5

b e tw e e n m ovem en ts

p e rsis te d

in tro d u cto ry

expanded
T here

d is p a rity

have

In su ran ce

attach ed

been

such

sh o u ld

p rice s

it

in d u s tr ie s

p o st-w a r
th e

is

had

As

*

9 9 .5

in

years:

It

o f

a

re strictio n s,

1926

1930

day

ru le s .

ce rta in ly
th ese

th e

1 9 2 5 -3 1 .

P rice s

1 0 5 .6

th e

b rick s

from

d e m a rca tio n

In su rance

w ith

M a te ria ls

Food

of

v a rie d

OF MONEY WAGE R A T E S

Y ears

W h o le sa le

(n u m b er

m a in te n a n ce

and W ages

A verage

have

cum bersom e

U n em p loym en t

circu m sta n ce

aspect

to

These

a

th e

ca p a city

co n s id e ra b le

in d u strie s ,

U n io n .

p re-w a r

th e

beyond

e x p a n sio n
o u tsta n d in g




9
e x a m p le

som e

b e in g

h a lf

co a l,

m illio n
The

w ork"

cla u se

p lo y e d

to

ground

th at

of

it

rate

risk

was

of

h u m a n ita ria n

th e

fo r

co n se q u e n tly

p e rio d s .
in

th e

th e

It

p rice

about

lly o *

w ages

are

se llin g
have

not

above

1924

h ig h

at

a

and

la b o u r

co n trib u te d

re q u ire d .

a .r g u a b le ,

betw een

th e ir

in d u stry

p a y in g

Tho

to

tim e

have

and

b e lo w

w hen

fe lt

th e

fre e

d o in g

and

when

th e

unem ­

on

th e

a lso

of

is

d u rin g

pari

ce rta in

in e la s ticity

of

of

a d a p ta tio n

to

an

p o ssib le

wage
w ith

is
are

in d e x
any

show n
one

e v id e n ce
b ein g
rig id

stru ctu re
c h a n g in g

get

sla ck

in cre a s e d

th a t

to

in d iv id u a l

short

had

th ere

th e

is

is

passu

and

it

It

la b o u r

p r ic e s

’’ d o l e "

secured.

th e

w orkm en

d is­

to

q u ite

th at

in

and

fo rce

som ew here

from

sla ck

la b o u r

S till

and

th e

because

are

o f

th e

co m p u n ctio n

orders

fa lle n

fro m

of

la b o u r.

le s s

how ever,

p o licy

m em bers

b u sin e ss

w ages

a

both

e x iste n ce

1929.

ra p id

seek in g

en a b led

of

pursue

w ere

p ro d u ctiv ity

th at

th e

to

b la ck le g

have

keep

s h o u ld

re p e a le d )

ca p a b le

a b le

w hen m o r e

to

in d e x e s.

too

w ith

p e rio d s

a g a in

’’ g e n u i n e l y

own u n e m p lo y e d

because

w ith o u t

is

ta b le

th e ir

short

of

o ccu p a tio n .

th ey

o b je ctio n s,

p o s sib le

in ta ct

been

because

p a rtly

sam e m en b a c k

concern

have

th e

w ere

usual

e m p lo y e rs

rem oved

o ff

th ey

b re a k in g

la b o u r,

men

A cts

th e ir

m a in ta in

su rp lu s

1925.

w h ich

u n io n s

m issin g

perm anent

(n ow

not

strik e

a

In su ran ce

m a in te n a n ce
to

was

of

w ork

F u rth er,

tu rn

in

th ere

in te rp re ta tio n

th e

refu se

o b lig a tio n
th e

m en

lo o s e

Trade
w age

w here

of

of
by

th at

som e

p reclu d ed
w age

from

ru le s

B ritish

co n d itio n s

was

**

*

See

B u lle tin ,

Jan.

**

See

a rticle

S lum p

C o m m e rcia l

and

23,
of

1930

1930,

F in a n cia l

and
L.

C.

attach ed
R o b b in s,

R e v ie w ,"

Feb,

sh eets.
"T im e s’
10,

1931.

Annual
^

- 10 .

F I N A IT C 5 .

i ng
The
in v e stm e n t
a fte r

th e

m id d le
1924
th e

1923,
th e

average

cou n ts
and

b rie f

th e

se rie s

seen

th at

is

p ost-w a r

average
year

th is

From

M arch

le v e l

th e

to

to

short

th ey

2% $),

th e

d is co u n t

rate

th e

becam e

term

m oney r a t e s

f e ll

and

upw ard

le v e ls .
fa ll

to

day

O n ly

for

m oney

rem a in ed

up

above

th e

once
2$,

consequence

m oney,

crash

was

w h ich
and

th e

as

w ere

Thus,

th e

rose
5$

to
4$

above

fo r

th e

d is ­
3$

3 m on th s

b e g in n in g

except

fo r

th ree

to

in

run

grea ter

ju s tm e n ts

had
The

show

som e

in

th e

m oney

re v iv a l
an

th at

e x p e rie n cin g

cheap

short
to

in ju ry

a fte r

fo r

th e
at

cause
th is

th e

and

of

la tte r

part
o f

p r o fits

and

b a b ly

absence

of

m o n th ly
M ay

of

boom
th e
th is

average

1927,

was

S treet

trad e.
th e

stru ctu ra l

by

1928

-

trad e
fo r

was

depressed

sp e cu la tiv e

have

been

done

an oth er

boom

in

and

co n d itio n s
lik e

run

a ll

th e
-

fir s t

ch a ra cte ris tic

purposes,

stru ctu ra l

qu arters

stock

risin g

th at

M ay

-

rate
J u ly ,

*/as

b elow

1928.

4$

in

-

o f

exchange

p rice s ,

d e ce iv e d

S ep t.

h ig h
yet

m a la d ­

p rod u ction .

th ree

in cr e a s e d

except

i f

by

so

and
m any.

,. Vj/
The

th e

p e rio d

W a ll

B ritis h

e x p la n a tio n ,

New Y o r k

m ig h t

in te n s ifie d

in cre a s e d
th e

was

o f

fa c ile

a ttra ctio n

been

fe a tu re s

co m in g

too

a lth o u g h

duo

lo n g

o f

current

ig n o re d .

m oney r a t e s
th e

in d u s tr y

p o s s ib ility

m oney w as

d is e q u ilib ria

id e a

B ritish

h e ra ld e d
D ear




w h ile

p e r io d s .*

d iffic u ltie s

*

in

3 m on th s

ex ceed in g

S tan dard

by

b elow

average

years,

G o ld

lo n g

ten ded

h ig h

day

fiv e
th e

short

day m oney

1925

fo r

R eturn

m arket

day

th e

w h ile

boom ,

n e a rly

In

of

d is tin c tly

o f

was

3

above

open

In

dear

th e

a lm ost

1929.
th e

o f

it

g iv e

and m a in ta in e d

fo r

rem a in ed

1930

and

m o n th ly

b ein g

d u rin g
of

m arkets,
co lla p se

o f

d id

a c c o m p a n y /ta b le s

O ct.

1925,

it

1929
a c tiv ity ,
was

pro­




- 11 -

CHARACTER

As
im p o s e d

in

p re v io u s ly

G reat

p r ice s

sin ce
from

it
a

over
was

e le m e n ts

of

It

upon

a m ovem ent

1929,

ju s t
in

th e

w h ich

c u ltie s

export

trad es.

s e rio u s

e ffe cts

have

had

G reat

B rita in ,

w ith

p ort,

but

th e

th e

w ith

present

a g g ra v a tio n

of

th at
was

and

fa cto r

en tered

regarded
io u s

change

a

not

has

in to
1930

th e
at

to

fo r

th e

better.

d iffe r e n t ' tren d
Tn

th e

th e

g o ld

stan dard

W ith
gave

o b v io u sly

o f

a

product

it s e lf

la st
to

of

w ere

T here

th at

second

th e

w orse,

m on th
of

of

th e

tard y

situ a tio n

th at

change

th e

tru e

le a st,

r e su lts

u n til

cou n try

fa ll

w h ich

fa ll

th is

d e p re ss io n

situ a tio n

e x p la in s

th e

th e

co n tin u o u s

to

steady

its

super­

se rio u s

le v e l.

econom y

expressed

and

fo r

to

p rice

m ost

of

but

u n iq u e

th is

th e

part

c e rta in ly

a n a log ou s

years,

d e fin ite

and

as

o f

on

slow

o f

was

in

th e
r is e

th e

w ou ld

d if f i­

in

cou n try

ch ie fly

any
such

d e s tin e d

e x iste d

to

fo r

as

ex­

b eforeh a n d

as

a

se rio u s

situ a tio n .

p a rtly

qu arters

g o ld

A w o rld

p a rticu la r

d e p re ss io n

fir s t

th e

of

state

retu rn

r e fle cte d

la rg e

d e p re ss io n

T h is

had

a

a

system

m a la d ju stm e n ts

case

w ere

p e rio d

by

above

d e p re ss io n

e x istin g

to

d eterm in ed

le v e l

th e

an

present

a

r ig id ity

of

th e

fo llo w e d

1924

p a rtly

p rice

n oted ,

E rita in

d is e q u ilib riu m .
in

OF THE PRE SE N T D E P R E S S I O N

r e co g n itio n
G reat

e co n o m ic

th e

co rre sp o n d in g

because
no

th e

se rio u s
qu arter

p re v io u s
th e

of

of

th e

th at

B rita in .
situ a tio n

d is a p p o in tin g ,

was

qu arter

course

th e

but

of

of

e a rly

th e

absen ce

d id

in

th e

co u ld
in

because

setback

new

For

p e rio d

not

a

of

be
prev­

of

a

any

p ro d u ctio n ,

u n e m p lo y m e n t

suggest

years.

new

situ a tio n

was

re v e a le d

by

a




- 12 -

by

a

heavy

versal

o f

fa ll
th e

d e te rio ra tio n
d e p re ss io n

in

p ro d u ctio n

and

seasonal

m ovem ent

over

rem a in d er

had

th e

d e fin ite ly

in

in

exports

and

e m p lo y m e n t.

of

in v o lv e d

th e

year,

such

by

a d e fin ite

T here
and

by

sh e lte re d

was
th e

re­

p ro g re ss iv e
end

th e

in d u strie s

as

b u ild in g .
G e o g ra p h ica lly
"b la ck

sp ots”

in

The
s e n ta tiv e

C ou n ty

P ig

N orth

ch aracter

in d ic e s

& P rov.

New C a p i t a l
Coal

th e

fo r

o f

th e

C le a r in g

Issu es

th is

Iron
com m enced

P ro d u ctio n

1924

U n em ploym en t
V olu m e

of

th e

E xports

n e a rly

change

fir s t

can

qu arters

LMn.

S teel
of

cover

(0 0 0 0

S h ip b u ild in g

re fle cte d

:

io

o f

ton s)

in
th e

be
of

a

sp re a d in g

w h ole

of

th e

illu s tra te d
1929,

1930,

o f

th e

cou n try.

by

repre­

1931.

1929

1930

1931

1191

1156

1016

183

106

22

6813

7014

5941

EMn.

O utput

Index

to

was

(0 0 0

ton s)

167

192

101

(0 0 0

ton s)

240

237

139

(0 0 0

ton s)

33

362

427

=100

1106

1109

(00 0* s )

1375

1599

1924

1 0 6 .7

9 9 .9

2675
6 9 .2

%:

U n em p loym en t
(S .E .

A rea

6 .5

8 .0

1 2 .7

(S .W .

A rea

8 .6

9 .7

1 4 .7

(N .E .

A rea

1 4 .1

1 6 .3

2 6 .8

(N .W .

A rea

1 2 .6

1 8 .1

2 8 .9

C o m p a riso n

w ith
I f,

as

v io u s ly

e x istin g

ness

th e

of

e a r lie r
is

p e rio d

of

th e

d u ra tio n

th e
o f

n ecessary

situ a tio n

present

th e

d e p re ssio n s.

d e p re ss io n

w o rld

th e

is

in

th e

tak en
is

d e p re ss io n

d e p re ss io n

case
in to

of

of

com b in e

make

th e
it

th e

th e

u n p a ra lle le d .

is o la te d ,
to

B rita in ,

co n s id e ra tio n ,

course

is

G reat

se rio u s­
Even

m a g n itu d e

one

of

pre­

th e

i f

and
m ost




- 13 -

se rio u s
som e

on

record.

fe a tu re s.

e x ce p tio n a l
fe ct

of

b elow

a

The

The

fo llo w in g

1921

d e p re ss io n

circu m sta n ce s ,

coal

strik e

fig u re s

th e

but

even

T rade

is

om itted

th en

U n io n

co m p a riso n

because
th e

u n em p loy m en t

c/o

S ta tist

o f

in te n sifie d

e f­

p ercen ta ge

was

P rice

In dex

1 8 6 7 -7 7 -1 0 0

M in im u m

(F eb .

)

2 .6

1891

M axim u m

(M ay)

1892

M axim u m

(D ec.

)1 0 .2

1892

M in im u m

(S e p t.) 6 6 .8

F a ll

over

19

m on th s

7 2 .8

- 8 %

1907

M in im u m ( A p r . )

2 .8

1 9 0 7 M axim u m (M a y )

8 2 .4

1909

M axim u m ( F e b . )

8 .4

1 9 0 9 Mi n i m u m ( F e b )

7 1 .9

$
1929

M in im u m ( J u n e

1931

M ax im u m ( F e b . )

)

F a ll

9 .6
2 1 .7
$

F a ll

over

over

25 m on th s

d e clin e

in

-

19

1 9 3 0 /1 9 2 9

18

• 24

e co n o m ic

$

S teel

iro n

10

n a tio n a l

30

ou tpu t

1 9 0 8 /1 9 0 7

th e

$

8 4 .4

8

on

13

1 2 0 .5

10

situ a tio n

of

th e

d e p re ss io n

co u n trie s.
T h is

is

in d u s tria l
in

=

1 8 9 2 /1 8 9 1

R e p e rcu s sio n

trad e

m on th s

1 9 2 9 M axim u m ( M a r . )

P ig

oth er

21

1 9 3 1 M in im u m ( A p r . )

P ercen tage

an

of

th e

1891

$

on

w ith

a

21.
U n em p loym en t

in

a ffo rd

raw

an

im p o rta n t

cou n try

m a te ria ls

p re p o n d e ra tin g ly

of

such

and

fa cto r
as

food

in

th e

d e p re ss io n

G roat

B rita in ,

stu ffs,

and

m a n u fa ctu res.

It

sh o u ld

a
be

w ith
la rg e
n oted

a

in

its

la rg e

export
th at

e ffe ct

im p o rt
trad e

th e

p rice




14 -

m ovem en ts

qu oted

w h ich

re la te

th ese

are

la rg e ly

p rice

im p o rte d

fo r

of

and

th e

In
a

in

in

export
o n ly

in d u s tria l

c o m p a rin g
s lig h tly

1930

m a n u fa ctu res.
20$,

and

th is

of

raw m a t e r i a l s

m a n u fa ctu res.

of

e ffo rt

w h ich

on

o n ly

4 .5 $ .

was

1 2 .5 $

and

by

and

in d ice s
th at

by

no

m eans

p a rticu la r

exchanged

fo r

of

th e

in

For

The

fo r

Such

fo r
it

a

is

seen

p a rtly

th at
th e

sam e

m a te ria ls

as

cou n try

m a in ta in e d

produce,

p a y in g

fo r

it

20$

le s s
and

th e

of

th e
hom e
repre­

advantage

B rita in

in

10$

its

of

th e

fo r

hom e

rough

im p orted

q u a n tity

in

e ffo r t.
a

17$.

exports.

a b a sis

th e

of

q u a n tity

of

th e

in d u s tr ia l

d e clin e d

red u ctio n

u n e m p lo y m e n t

to

a

of

m ovem ent

G reat

e ffe ct

in

case

co n s titu te

of

v o lu m e

In

it s e lf

raw

(w h ich

th e

re q u ire d

w ith

th e

fo o d s tu ffs

th at

m a n u fa ctu res

are

In

tra d e

of

w h ich

and

a

w ith

of

exports

in

co in cid e d

d iv e rsity

fo o d

re fle cte d

th is

re p re s e n ta tiv e

sm a lle r

is

p rice s

im p o rte d

term s

e ffe ct

w h olesa le

im p o rte d

m oreover

th e

of

im p o rts .

m a n u fa ctu res
are

1929,

of

and

of

expressed

from

th u s

in

in d e x

1929,

and

4 .2 $ .

im p o rts

was

are

nor

are

q u a n tity

H er

by

They

general

in d e x

change

w ith

la rg e r

12$

exported

fe ll

its

Trade

of

co u n trie s.

o b ta in s

m easured

m a te ria ls,

m ovem en ts,

exports

o f

trad e

co n s id e ra b le

raw

abroad.

p rice

was

of

and

are

m a te ria l.

p rice s

p rice s

th e

overseas

th e

th e

d e clin e

p ro d u ctio n )

cou n try

in

d e clin e

fa ll

of

p rice

a

general

a

in te rn a l

show ed

th e

sen ts

from

B oard

exports

of

o b ta in e d

raw

se ctio n

fo o d s tu ffs

th e

d e clin e

b u lk

p rev iou s

Thus

sim ila r

w h ils t

to

m ovem en ts
food

1930

th e

m a in ly

re p re se n ta tiv e
th e

in

im p o rts

exported
co n su m p tio n o f

The

re le a s e

s ta tis tica l




e stim a te

su ggests

e m p lo y m e n t
export

in d u ce d

in d u strie s

o p e ra tio n
fu rth e r

of

a

stage

b e n e fits
in

of

th e

and

raw

p re ta tio n
fu rth er

th e

m ost

of

G reat

is

w o rld

and

of

w ill

th e

w h ich

trad e

may

be

be

o f

run

a

qu oted

here

to

th e

ad equ ate

The
term s

th at

The
as

r e lie f.
general

in

trad e

re q u ire s
on

s ta tis tics

of

fo r

such

th e

an

in v e s tig a tio n .

Trade

of

G reat

B rita in

su p p ly in g

Food

w ith
and

som e

of

th e

C o u n trie s

Raw M a t e r i a l s

Im ports

(E M n .)

E xports

1929

1930

A rg en tin e

82

57

29

25

Egypt

24

14

1 2 .5

10

U .S .A .

196

154

46

29

B ra zil

7

8

13

Canada

46

38

35

1929

1930

8
•

29

A u stra lia

56

46

54

32

New Z e a l a n d

48

44

21

18

63

51

78

14

9

12

In d ia
S tra its

S e ttle m e n ts

th e

in te r­

lig h t

data

th e

re m a in in g

pow er

o f

a

treatm en t

above

d iffe re n t

r e s u lts .

th e

As

th ose

p u rch a sin g

ch a n g in g

in

trad e.

u n em p loy m en t

c o u n trie s.

throw

of

from

re ce iv e

un­

p a ra d o x ica l

a p p lie d

reduced

of

occurred

dem on strated

v ia

fre e ly

m ig h t

lo n g

th is

term s

c o u ld

p r e su m a b ly

p ro d u cin g

and

th e

a d d itio n a l

has

tra n sfe rre d

been

e ffe cts

by

w orkers

re p e rcu ssio n s

im m e d ia te

B rita in ’ s

been

has

fo r

in

it

d is p la ce d

m a te ria l
th e

change

have

B rita in ’ s

d e p re ss io n ,

accou n ted

process,

a n a ly s is

d e v e lo p m e n t,

supposed
G reat

of

and

change

situ a tio n ,

d is cu ss io n s

fo o d

-

th e

th is

to

T h is

in

by

15

fa v o u ra b le
in

e m p lo y m e n t

w o rld

th at

-

53
#

7

-

16

-

Monetary F a c to rs.
The immediate e f f e c t o f the depression was to brine r e l i e f
in the money f i e l d .

As has been exp lained , t h is r e l i e f was at f i r s t

regarded, not as a symptom o f trade and in d u str ia l r e c e ssio n , but as
a fa c to r working fo r improvement on the e x is tin g u n sa tisfa c to r y s i t u ­
a tio n .

As events soon proved, the rapid easing o f money r a te s was

the orthodox precursor o f a trade d ep ression .

From 6>$ at the end

o f October 1929 the Central Sank rate f e l l ra p id ly by su ccessive
stages o f

to 3# in May 1930:

correspondingly.

open market and other r a te s declined

This development was rep resen tative o f monetary

movements in the lead ing c e n tre s, but the subsequent developments in
the B r it is h money market showed that the sp e c ia l fa c to r s which had
rendered the B r itis h p o s itio n d e lic a te before the slump s t i l l per­
s is te d .

Gold movements were unfavourable over the r em in d er o f the

year and the p rin c ip a l exchanges kept below p a r it y .

As a r e s u lt

Great 3 r i t a i n lagged behind the downward movement^ o f the leading
cou n tries and at times open market r a te s were pegged a r t i f i c i a l l y
to support the exchanges.
not out o f q u estio n .

On occasions a r is e in the Bank Hate was

To the present moment open market ra te s in

London have remained 1 $ higher than in Mew York, P a r is , Amsterdam
and S w itzerlan d.
N ev e rth eless, money has been cheap enough to encourage
e n te r p r is e , i f t h is wers the only fa c to r in the s it u a t io n :

but an

important le sso n o f the depi'ession i s that cheap money in i t s e l f does
not a u to m a tica lly provoke a rapid recov ery.

The la ck o f en terp rise

in face o f favourable money r a te s i s w e ll illu s t r a t e d by the fig u r e s
fo r c a p ita l issu e s in Great B r ita in fo r 3 se le c te d p e rio d s:







- 17

New C ap ital Issu es in Great B rita in
1 st quarter o f year

1931

1929

1930

For Home

69

36

7

For Abroad

45

33

____8

114

69

15

T o ta l:
Stock Exchange Development.

The downward turn in ordinary sharoo came as e a r ly as
February 1 9 29, coin cid in g with increased monetary strin g e n c y .
r a is in g o f the Bank Hate from

to 5

The

af t e r i t had remained at

the former fig u re fo r nearly two y e a r s, marks th is change o f phase
on the Bourse.

Since then the trend o f share p ric e s has been sharply

downwards with only few and short periods o f apparent s t a b i l i t y .
P r a c tic a lly a l l c la s s e s o f shares have su ffered in t h is slump.

1929

saw the c o lla p se o f many h ig h ly sp ecu la tiv e and dubious issu e s o f
the boom p e rio d ; but the a c tu a l depression has involved lead in g f i r s t c la s s s e c u r it ie s and has i n f l i c t e d serio u s lo s s e s on the sober in ­
v e sto r.

Fixed in te r e s t s e c u r it ie s and government stock in p a r tic u la r

should have r is e n p ari passu with the f a l l in in te r e s t r a t e s , but the
movement has not been as uniform and as general as i s usual in such
a phase o f the c y c le .

The depression has involved se v e r a l food and

raw m aterial producing cou n tries in fin a n c ia l d i f f i c u l t i e s , and the
blow to the n atio n al c r e d it has been r e fle c t e d in the p ric e s o f th e ir
bonds.

Since Great B r ita in i s a large holder o f Overseas s e c u r it ie s

the in v esto r has a ls o l o s t h e a v ily in that f i e l d o f investm ent.
A u str a lia and B r a z il may he quoted as examples.

In a d d itio n to ad­

verse economic in flu e n ce s on n a tio n a l c r e d it , p o l i t i c a l fa c to r s have
worked in the sane d ir e c t io n , and Germany, China and India a ffo r d
examples o f t h i s .

The r e s u lt has been that the swing over to bond

- 18 -

investment which should ch aracterise a depression period has proved
s i p ^ l a r l y fe e b le , and in the absence o f t h is lin e o f business the
Stock Exchange and the c a p ita l market have remained almost completely
stagnant**

The few new issu e s that have been made have been placed

with great d i f f i c u l t y and recent w ell-sp on sored issu e s stand at a
considerable d iscou n t.

B r itis h Government stocks have w ithstood

these depression in flu e n ce s but even here the movement has not been
c o n s is te n t.

For example apprehension concerning the n a tio n a l fin a n ­

ces caused a severe set-b a ck in g ilt-e d g e d s e c u r itie s in e a r ly 1931*
Budgetary d i f f i c u l t i e s .
While the n atio n al fin an ces have been se v e r e ly strain ed by
the depression,

the development so fa r rather goes to i l l u s t r a t e the

fin a n c ia l strength of Great B r it a in .

For one thing the great bulk of

the revenue i s r a ise d by d ire ct ta x a tio n , and the d i f f i c u l t i e s exp eri­
enced by cou n tries which r e ly h e a v ily on revenue from t a r i f f s have not
a r is e n .

A lso in d ir e c t ta x a tio n i s m ostly derived from d u ties on a

com paratively small range o f commodities in in e la s t i c demand.

As a

r e s u l t , estim ates have not been badly thrown out by f a l l s in p ric e s and
reductions in q u a n titie s , imported or consumed, o f d u tiable a r t i c l e s .
As compared with the previous fin a n c ia l year the ordinary
revenue o f 1930 - 31 a c tu a lly increased by L42 M n., again st an e s t i ­
mated increase o f i>55 M n ., m ostly to be dsrived from a d d itio n a l

*There were o f course cases where issu e s were h ea v ily over-subscribed
as in November 1930 L86 Mn. o ffe r e d fo r £>6 Mn. Central E l e c t r i c i t y
Board 4-|$ @ 9 5| .
South A fr ic a 4%J> a ls o oversubscribed.




V

-

ta x a tio n .

1 9 -

Of the d ir e c t taxes only the stamp d u ties badly f a l s i f i e d

the estim ates and th is was due to a mistaken c a lc u la tio n o f Stock
Exchange a c t i v i t y over the y e a r.

Customs d u ties p r a c t ic a lly reached

the estim ates and the short f a l l in e x c ise revenue was le s s than 5*
On the expenditure side supplementary estim ates fo r unemployment r e ­
l i e f increased the d e f i c i t , which on balance amounted to £23 Mn.
I t should be emphasised th at the r e s u lt covered p ro v isio n fo r debt
redemption to the to t a l o f £43 Mn.
/
Reference must be made, however, to an important form
o f expenditure which i s not included in these accounts, hamely bor­
rowing by the Unemployment Insurance Fund.

This borrowing i s of

course u ltim a te ly based on Government c re d it and i s l i k e l y to be
irre co v e ra b le as fa r as the Unemployment Insurance scheme i t s e l f i s
concerned.

In ad d ition to ordinary expenditure out o f the Fund and

supplementary government expenditure (included in the Budget accounts)
unemployment r e l i e f has fu rth er involved borrowing by the Fund to the
t o t a l in that fin a n c ia l year of £36 Mn.
But even i f

t h is i s taken s t r i c t l y in to account, the p u b lic

fin a n c ia l balance sheet shows a c r e d it o f £ 7 Mn.

In other words,

Great B r ita in in a year o f unexcsmpled d ep ression, covered i t s p u blic
expenditure including generous p ro v isio n fo r a v a st army o f unemployed
and achieved a sm all but genuine balance for debt redemption.

For the

year 19 3 1 -2 in sp ite o f an estim ated lower y ie ld from d ir e c t taxation
(a ssessed on the poor business r e s u lt s fo r 1930)

and in sp ite o f

continued p ro v isio n fo r the unemployed, the budget i s balanced (in
estim ate) with the aid o f only £6 Mn. o f new ta x a tio n .




-

20

-

To the Memorandum was attached a se t o f annexes.

One table

(Turning p oin ts o f various S t a t i s t i c a l S e r ie s) i s here reproduced
(Annex I ) ;

a l i s t o f the other ta b le s i s given below with in d ica tio n s

o f o r ig in a l sou rces.
LIST OF STATISTICAL TABLES
1.

(a)
(b)

Im ports, main c la s s e s , v a lu e s.
E xports, main c la s s e s , v a lu e s .

(c)

Output.

(d)

S h ip b u ild in g.

2.

3.

C oal, Iron and S t e e l.
Tonnage commenced.

Transport:

Shipping C leran ces.
F reight and Charter Rates ind exes.
Unemployment numbers by in d u s tr ie s .
(a)
(b)

Net Imports o f Raw M a teria ls V a lu es.
Exported Manufactures.

4.

P hysical Volume o f exports o f c e rta in manufactures by
country o f d e stin a tio n .

5.

Iron and S te e l s t a t i s t i c s fo r U.K.

6.

Quarterly Index numbers o f production.

7.

Wholesale P ric es Board o f xrad e.

8.

Wholesale P ric es Sauerbeck.

9.

BowleyTs Wages Index - Old Index.

10.

Bowley's Wages Index - New Index.

11.

Index o f Terms o f Trade.

12.

Balances o f Income and Expenditure fo r U.K.

13.

Finance Tables from B u lle tin 1 9 2 4 -3 1 .

14.

Exchange R ates.

15.

P r o f it s Q uarterly v a r ia tio n s and earn in gs.




/

- 21 16.

' A n a ly sis o f Net P r o f it s

(Annual) by in d u s tr ie s .

17.

Gold Movements U.K.

18.

M igration o f B r it is h N a tio n a ls.

Source:

Nos. 1 - 6 , 13, 14 and 1 7 , London and Cambridge Economic
S o rv ice ; (Monthly B u lle tin s and S p e cia l Memoranda).
N os. 7 and 1 8, Board o f Trade Journal.
No. 8 , The S t a t i s t .
Nos. 15 and 16 , The Economist.







ANNEX I I .

i

Memorandum of the Lo£d£n_a£d_C£m]££_d£e_E£onomi£ S e rv ic e .

SOURCE

/C o n t i n ./

:

Tables Nos. 9 and 1 0 , London and Cambridge Economic S erv ice ,
P r o f. Bov/ley*s Memorandum.
Table No. 1 2 , The Board of Trade Journal.
I t has been considered d e sira b le to reproduce the ta b le s on Terms
o f Trade /N o . 1 1 / .
This table is given below:
INDEX OF TERMS OF TRADE
1880 - 1913 = 100
Year
1920

Import P rices
A
379

Export P rices
B
487

A/B x 100
7 7 .8

1921

253

366

6 9 .1

1922

202

271

7 4 .5

1923

198

258

7 6 .7

1924

206

257

8 0 .1 5

1925

206

252

8 1 .7

1926

-

1927

181

223

8 1 .2

1928

182

222

82

1929

178

216

8 2 .4

1930 (1 s t Q tr .) 165

214

7 7 .1

-

-

See A. G. Silverman: Review o f Economic S t a t i s t i c s August 1930.
The above fig u r e s are a continuation o f Silverman*s fo r post-w ar
p eriod .




A-TEX r

1929

Before 1929

S eries*

1 st Qtr.

2nd Qtr.

3rd Q tr,

Uth Q tr,

P r ic e 90 In d u str ia l Shares

Max.

Index Fixed I n t , S e c u ritie s

Min.

Short Money Index

Max.

Oct,

Day to Day Rate

11

}rovf

3 Kths. Discount Rate

IT

C apital Issues U.K.

II

"

11

Bank C learings

/
Town*'
P ro v in c ia l

Wholesale P ric e s

Oct,
A p ril
•v *

Jap.

II

a)
Dec.

'2&

r

March

i
(2)
Sept,

-

Max •

Food R e ta il Index

H

Inports

II

(Value) A ll Groups^

x/
Exports ' Excluding Food
M

Food

O ct.-R o v !
O c t .-N ^ )
J a n .^

II

I .'ay

M

A p ril

1

Output

Coal

(5 )
March'

II

V

P ig Iron

Oct.

S teel

March

Shipping.*/
Tonnage Entered
M

May

Leaving

Jan,

Railway R eceipts
Unemployment Males
T otal

3rd Qtr.

Sept.

-

Cost of Living

2nd Qtr.

Jan.-Feb*

II

Abroad

1930
1 st Qtr.

Oct,
in ,
June

Coal

"

Iron and S te e l

11

Engineering

"

Shipbuilding

”

June

R uilding. & Construction "

June

1
Jan.

March
June-July

^ 6)

Cotton & Wool

End of

Other Occupations

3rd Q tr .19 2 7 (7)

Production Q uarterly
General Index
Coal
P ig Iron V
S teel
Shipbuilding
Railway V ehicles
T e x tile s
Pood & Tobacco
Chemicals
Paper

x/
(1 )
(2 )
(3 )
(H)

I,lax.

2 nd Q t r , 192 g

Judged from a s e r ie s corrected, fo r Season.
Beginning of Down Trend.
Steady F a ll Eegan.
Steady F a ll began December.
'Turning P oin t fo r Food and Raw Mat. sep a ra te ly
Manufactured Imports Aug. *2 9 ,

;?

(S)

(5) Variations no more than Seasonal t i l l end 1930*
(6 ) Renewal of Upward Trend.
(7 ) Ivot S ig n ific a n t !
Employment increasin g more than
in other in d u s t r ie s .
(S) Too recen t.

Uth Qtr,




D epartment of C om m erce
O F F IC E O F T H E S E C R E T A R Y

WASHINGTON

J u ly 9 , 1 9 31.

Hon. Eugene Meyer,
Governor, Federal Reserve Board,
Washington, D. C.
Dear Mr. Meyer:
Mr. Edward Eyre Hunt who i s in Geneva,
Sw itzerland, atten d in g the meetings o f the Economic
Committee and o f the sp e c ia l committee which i s studying
the course and phases o f the bu sin ess d ep ression , has
asked me to send you in confidence the enclosed report
on An Inquiry in to the Economic D ep ressio n ,— France.
I think you w i l l fin d i t p a r tic u la r ly
in t e r e s t in g .

i

Yours very s in c e r e ly ,

r e c e iv e d

Translated from French,
STATISTICAL INSTITUTE 0* THE
An

In q u iry

T h is

report

num ber
poses

of
to

lis h e d

in to

sh o u ld

ta b le s .
re fe r

in

m o n th ly

have

been
serve

ta b le s

fo r

fro m

of

th o

sh o rtly

be

p u b lish e d

1919

v a rio u s

O ffice

of

Year

annual

prepared

m itte e s

TAo p r o s s i o n .

w ill

th ose

part)

been

Perm anent

E co n o m ic

S ta tis tica l

fig u re s

have

It

to

th e

r e tro sp e ctiv e
th at

th e

by

a cco m p a n ie d
a ll

th a t

havo

Book

fo r

been
for

on,

re fe r

th ose

th o

in v e s tig a tin g

co u n trie s
th e

a

to

and

v ?h ich

a u sp ice s

In te rn a tio n a l

la rg o

pur­
pub­

F rance

fig u re s;

under*
th e

by

n ecessary

(th e

th e
ta b le s
com ­

w ill

of

th e

S ta tis tic a l

In stitu te .

FRANCE.
(A

report

a cco rd in g

to

th o

M arch
I.

G eneral

S tudy

d en cies

of

of

th e

4,

p la n

S co n o n ic

C y clic

occurred
of

p e rio d
a fte r

w h olesa le

1 9 0 1 -1 9 1 0 ,
589,

b ein g

th e

E n g la n d

:' -s
1927,
have

and

we

w h ich
th ese

observed
in

a fte r

of
war
in

to

1930

c ris is

of

1920.

was

com pu ted

h a v in g

as

391

1921;

of

in

ono

th e

th o

year

in

th en

of

stru ctu re?

th e

m e e tin g

of

and

sin ce

1922.

Changes

Ten­

i n th e

For

th e

tc

exchange
of

of

v a lu e

sp e cia l

655

a

sudden

in s ta n ce ,

b a sis

average
th o

upon

The

F rench

average

1920

in d e x

on

th e

th e

in

389.

th o

d e p re ss io n

fo r

N a p o le o n ic

fo r

reached

th e

th e

in d u stria l

rise

New Y o r k ,

m o n th ly

of

has

w ars,

in

in d e x

p e rio d

fig u re
p rodu cts

p rice s ,
boon

w h ich

account

greater

fo l­

France,

S tates.

an u p s w in g

fo llo w e d

by

a n a log ou s

clo se

C o n d itio n s

fo llo w e d

course

la te r,

m ovem en ts,

on

from

th e

U n ite d

show

th o

an

d o clin e

th an

sh a ll

sin ce

e co n o m ic




tc

in sid e

ta k en

lo w in g

th e

by

G e n o v a ).

S tru ctu re.

1922

p rice s,

d e clin e d

changed

from

at

M ovem ent

E co n o m ic
The

approved

1930,

of
It

th e
is

th e
to

b u sin ess

present

oth er

18th

in

d iffic u lt

d e p re ss io n .

m ovem en ts

cen tu ry,
to

took

been

say.

of

a

p la ce
To

what

to

by

changes

1926­

oxten t

flu ctu a tin g

in flu e n c e d

C e rta in

up

n atu re

changes
are

ap—

p a re n tly
war

th e

created

upon

th e

needs
our

have

m arket

of

peace

cou n try

q u ire d
tu res

for

sw in g

to

ce rta in

th is

fo rm e r

th e ir

th e

of

in cre a s e

th e

been

not
o f

for

com pen sated

a ctiv e

w h ile

fe m a le

w h ich

correspond

enorm ous

war

p ro d u ctio n

and

have

in te rfe re d

w ith

at

p o p u la tio n

le a st
and

by

to

th e
en a b led

expenses

of

fo r,

cam e

re g io n s

fin a n cia l

th e

th is

in v e n tio n s

d evastated

m e e tin g

m ig h t

new

a lw a y s

th e

expenses

w h ich

and

needs

re­

e x p e n d i­
exchanges.
th e

in

part,

by

an

in flo w

up­

a

fo r

fo r­

la b o re rs .
th ese

co n d itio n s,

a ris e n

in

th an

in

course

th e

p a ten ted

progress
have

th e

e co n o m ic
o**

r e q u irin g

T hrough

been

The

th e
o f

th e

v a rio u s
b u sin ess

short

of

a m p litu d e
1 9 2 2 -1 9 3 0 ,

sh a ll

p rod u cts.




changes

m ore

when m any

th at

accen tu a ted

in v e n tio n s

w ere

of

general

th e

eco n o m ic

w e ll-b e in g

m ovem ent

seem

not

tim es.
c e rta in
a

few

years

d u ra tio n ,

and

th is

reason

(o f

r e g u la rity .

of

d e ta ils

th e
of

O u tsid e
o n ly )

have

tw o -fo ld

of
been

rh yth m

w ar.

th is

m ovem ent

m ust

be

read

co n s id e ra tio n s :

F I G U R E S REGA RD ING P R O D U C T I O N ,
I.

/o

th e

a

th a t

n o ta b ly

ch a ra cte riz e d

c y cle s

lon g er
by

been

seen

e q u ip m e n t.

war

show n

p e rio d ic

im

A.

d u rin g

have

o n ly

fo llo w in g

in

in cr e a s e

was

th e

changes

th e

be

ce n tu rie s,

and

m ovem en ts

p e rio d

have

w h ich

upon

th e

stru ctu re

c le a rly

rh yth m s

su p e rim p o se d

For

cannot

p re ce d in g

except

m ovem en ts

m ovem en ts,

m o d ifie d

it

im p o rta n t

e clip s e d

cy clic

seasonal

fro m

do

p la n ts,

general

liv e s

have

in

and

The

e q u ip m e n t,

re su lts

e x istin g

th e

hum an

in

situ a tio n .

re co n d itio n in g

th e

in cre a s e d

war

changes

r e co n d itio n in g

have

to

in

im p rov e

p ro d u ctio n

U nder

th e

th e

re q u ire d
w h ich

lo s s e s

of

of

tim es;

g re a tly
The

e ig n

re su lt

c o n fin e

o u rs e lv e s

Crude

in

CONSUMPTION AND

STOCKS.

F o o d stu ffs.

th is

e x a m in a tio n

to

a

fe w

a g ricu ltu ra l

The
of

th e

to

a

la tte r

up

b it

fo r

has

a

sm a lle r

general

use

1929

been

e q u iv a le n t

th an

w heat

seem ed

harvest

to

of

d u rin g

a g a in st

S tocks

been

exceeded

sm a lle r

in

o n ly

1925,

th at

th e

in

o f

1921

areas

p re v io u s

1922

th an

and

and

1921.

in

1929

1913.

The

cu ltiv a te d .

p e rio d s ,

in

duo

The

The

wo

harvest

had re tu rn e d

in cre a s e

in

y ie ld

harvest

is

now

rye

u n d o u b te d ly

to

th e

m ore

h e cto lite rs

from

bread.

c o n s u m p tio n

as

fa v o ra b le

has

d im in u tio n

of

W heat
to

harvest

p rod u ction

made
a

w heat

has

changed

but

9 5 9 ,0 0 0

from

to

som ew hat

have

of

1929;

at

1902

th e

lit t le :

to

9 2 7 ,0 0 0

1922

1909.

in cre a se d

b e g in n in g

in

of

F rance

1931

by

th ey

reason

seem

to

of

th e

have

been

reduced.
They
p rice

are

s t ill

co n sid e ra b le

d e clin e

w h ich

we

P ota to

sh a ll

p ro d u ctio n

and

in

oth er

co n s id e r

co u n trie s

la te r

co n su m p tio n

w h ich

accou n ts

fo r

th e

on.

are

lik e

what

th ey

w ere

b e fo re

th e

w ar.

what

.V in e

p rod u ction

th ey

w ere

fo llo w in g
has

th o

b e fo re
w ar;

it

c o n s u m p tio n

th e

w ar.

has

now

has

Sugar
reached

in cre a s e d ,

p rod u ction
a g a in

th e

in

had

co m p a riso n

g re a tly

fo rm e r

w ith

in cre a se d

le v e l.

C on su m p tio n

in cre a s e d .
C a ttle

about

w hose

im p o rta n ce

had

d e clin e d

.ifte r

th e

d iv is io n

of

th e

w ar,

has

now

boen

restored .
In

q u ire s
ers

and

F ran ce,
m uch

made

d u rin g

up

th e

by

reason

of

la b o r:

th e

fo r

sh ortage

th e

course

of

th e

w ork

of

It




was

o f

and

from

th e

th e

a g ricu ltu re

in flo w

num ber

of

of

s t ill

fo re ig n

dead

or

re ­

Labor­

m u tila te d

w ar.

m in e ra l

p r a ticu la rly

wom en

re su ltin g

2.
E x tra ctio n

th e

areas,

fu e l

Raw Matori als.
has

im p o rta n t

a lw a y s
in

th e

boon

b elow

re g io n s

co n su m p tio n .

d evastated

d u rin g

th e

,

-

w ar.
it

In

has

th e

1922,

in cre a s e d

w ar.

On t h e

im p o rta tio n
ores

show s

in cre a s e d
la rg e ly
m a in ,

of
in

was

oth er

hand,

fo re ig n

to

th e

th e

steel

fro m

th e

in cre a s e

prew ar

m a te ria ls

th e

1922

in

In

to

m a n u fa ctu red

be

F rance
d u ctio n

o f

does

fin ish e d

s ig n ifica n t

had

th e

to ta l

been

g a in e d ,
w o o le n

in

as

even

in
th e

a ctiv ity

In
in

prew ar

days,

1930.

P ro d u ctio n

have

iro n

it

im p o rt,

fin ish e d

a p ro d u ctio n
can

n o ta b ly

be

la rg e r

tim e s;

th an

b e fo re

n e ce s sita tin g

th e

E x tra ctio n

iro n

th is
cast
in

e q u ip m e n t,

im p o rta n t

M a n u fa ctu red

of

in te g ra te d

steel

was

m ust

in to

been

and

an

e stim a te s

and

in
to

in cre a se d

a u to m o b ile

to

w hen

it

reasserted

p rice s

it s e lf,

does

th e

its

m e ch a n ica l

up




1926

of

1930

a r ticle s

th e

1928,

has

th e

keep

in d u strie s

in d u stry

In

fa r

to

1913 >

not

oxooedod

ton n age

prew ar

ton n age
iro n

th e
had

la rg e r.

of
has

and

s te e l,

n a tio n a l
in

The

1922

do­

re­

tota l

iro n

export

a r ticle .

i f

e n tir e ly ,

at

le a st

M ovem ents

of

th e

not

been

raw

p rod u cts,

P rod u cts.
s ta tis tic s .

a p p ra ise d

o n ly

b y m eans

of

m ore

pro­
or

le s s

in d e x e s.

A cco rd in g
of

not

in cre a s e d ,
tim e s.

France

3.

has

of

o n e -th ird

prew ar

represents

prod u cts

by

le v e l

o f

th at

oth er

ton n age

th e

excess

to

our

le v e l.

a

b elow

co n s u m p tio n
in

p la n ts

p ro d u ctio n

M any

coal

d o u b le

-

c o n s id e ra b ly

and y i e l d s

1922

o w in g

s t ill

sin ce

tw o -fo ld

and

g a in e d
and

it

4

o f

not

F r a n c e 's

exceed,

cotton

th e

p ro d u ctio n

d e clin e

in

in d u stry ,

m axim u m l e v e l

a g a in

general
1922,
prew ar

in

1928;

on

of

s ilk ,

th e

sin ce

in clu d in g

th e

from

to

It

in d u stry
su d d e n ly
ex ceed in g

is

1929.

concerned;

took
in

tw o -th ird s

of

ou tpu t

not

been

hand,

in

th e

had

oth er

le v e l

of

m a n u fa ctu re
th en

it

what

1913

th e

v o lu m e

of

d e clin e d ,

progressed

an u p sw in g .

1930

p rod u ction
it
re­
th e

had

been

1929.

in d u stry ,
1922

s ta tis tics ,

A fte r
o f

a

a u to m o b ile s,
at

le a st

rath er

in so ­

r a p id ly

se n sib le

co n s tru ctio n s

d e clin e ,
in

1913;

-

but

a

slo w in g

dow n

B.

EFFECT

D u rin g
had

fo r

th o

its

in

many

of

a g a in

-

tow ard

o ffic ia l

o b je ct

cases

have

it

was

tra n sfo rm a tio n s,

r e g u la tio n

e lim in a tio n

of

not

a lw a y s

im p o ss ib le

to

fo llo w

s u fficie n tly

re m u n e ra tiv e

p rice

e n ta ile d

a

o ffe r

a few
w h ich

n e ce s sa rie s

es.

M any

s w in g

la w s

a

of

and

h ig h

years.
th ey

v in g

ce e d in g

of

1930.

p rice s
and

and

co n s u m p tio n

of

th e

rise

in

p rice s

in

v ie w

of

th e

ex p e cta tio n s

cases

v e n ie n ce s

w h ile

m et

oth er

for

o f

w aste

in

ta in e d

end

goods

for

life *

r e su lts

re s tricte d

th e

OF R E G U L A T I O N S , - WAGES AND P O P U L A T I O N F A C T O R S .

w ar,

m a in

n e ce s sa rie s
The

occurred

5

They

life .

havo

fig u re

co n s tru ctio n

of

p rod u ction

ren ts

s t ill

houses

th e

bread
fo r

been

is

to

in

and

th e

su b je ct

v a rio u s

at

w ere

many

houses;

in v o l­

m u n icip a l

tax­

ren ts

ex­

re g u la tio n s;

p a ra ly z e d

m a in ­

in co n ­

p e rsis t,
to

a

c o n s e q u e n tly

r e g u la tio n s
of

th at

its

se llin g

s t ill

th ese

part

of

fa ce

d w e llin g

su b je ct

has

o ffic ia l
in

th rou gh

d e clin e ,

re g u la tio n s

in s ta n ce ,
th e

are

im p o ss ib ility

y ie ld e d ,

C e rta in

For

re g u la te d

th e

p ro d u ctio n

H ow ever,

have

d is clo se d .

of

ce rta in

p rice .

th e

fa ct

by

not

th e

th is

up­

le g is ­

la tio n .
N ev e rth e le ss,
a u th o ritie s ,
m ent

of

even

to

re lie v e

by

th e ir
fo r




of

ce rta in
upon

success

reg a rd in g

appear

la tte r

q u ite

th a t

th e

years,

p o s sib le

co n trib u te d

ca rte ls ,

n a tio n a l

e ffe ct

th e

th e

is

have

not

to

m easures

have

th at

had

tak en

m uch

e ffe ct

co n s tru ctio n

m a in ta in in g

a

by

th e
on

th e

ad vocated

ce rta in

p u b lic
m ove­

by

a ctiv ity

th e
and

u n e m p lo y m e n t.»

th e

sta b ility

It

may

A greem ents,
in to

does

d u rin g

b u sin e ss.

m u n icip a litie s

it

th e

o f

or

and

b u sin e ss

perm anency

m eaures

in te rn a tio n a l

goods

such

oth er

have

agreem en ts
of

rubber

a

sim ila r

in d u s tria lis ts

g e n e ra lly

sta b ility

of

has

m ust

been
been

not

p r ic e s

be

have

of

to

such

n atu re
in su re

d e n ie d ;
to

som e

m o d e ra tio n

sa tis fa cto ry .

le d

en tered

The

th at
co n d itio n s

agreem en ts
a

sw ift

p rice

abroad

in cre a se

of

6

p ro d u ctio n

w h ich

in

P ro te ctio n ism
by

p a ra ly z in g

tu rn
in

many

fo re ig n

1922

to

1926,

French

m eet

th e

sla ck

fe lt

th e

e ffe ct

in

was

fo llo w e d

co u n trie s

trad e.
in d u stry

by
has

due

was

to

a b le

co n su m p tio n .

fo re ig n

co m p e titio n ,

a

s w ifte r

re su lte d

H ow ever,

d o m estic

of

even

to

th e

export
L ater,

and

in

as

m ore

it

such
has,

p rice s.

e ffe cts

p rem iu m

an
to

r e su lt

of

m arked

exchange
to

a

d e clin e

from

exten t
a

as

greater

exports

to
exten t,

have

de­

c lin e d .

o n ly
of

th e

on

b a sis

th e

p ro d u ctio n

fu l
of

D u rin g

in
th e

la s t

in

of

p o p u la tio n
and

years,

th e
in

pow er

th e

of

a

th e

reason

d e clin e
of

th e

d ete rm in e d

by

C om puted
h ig h e r
th e

th an

p e rio d

had

French
h a rd ly

w ith

of

m on eta ry

th e
in

of

lik e

it

of

m a in ta in e d

sudden

co n su m p tio n

of

general

was
a

may h a v e

e x te n sio n
success­

la rg e

part

re lie v e d

th e

a ctiv ity .

W ages.
con sta n tly

have

even

in a sm u ch

a g ricu ltu ra l
rise

th e

be

from

in cre a s e d
as

th e

th e

la tte r

y ie ld in g
fa ste r

is

in

by

part

p rod u cts.

1911

d u ra tio n

in cre a s e d ,

to

1929

w h ich

has

even

im m e d ia te ly

been
preceded

1 9 1 1 -1 9 2 9 .
c >m.i p e t i t i o n ,
com p a n ies

to

decreased.

w ith

m a n u fa ctu red




th e

p e rio d

They

on

of

of

c o u ld

in te r v e n tio n

sense,

have

liv in g ,

d u tie s

T h is

re su m p tio n

w ages

of

reason

and

th is

R ig id ity

v a lu e .

fra n cs,

th e

In

c e rta in

cost

im p ort
g o ld

p rod u ction

n o m in a l

in cre a s e d

re d u ctio n s

in te rfe re d
fo r

1930,

cu rin g

.r c r e i g n
ta in

to

by

p ro d u ctio n

re g io n s.

cou n try.

6.

to

ta r iffs ,

fo re ig n

fa cilita te d

F ro m -19 22

a g ricu ltu ra l

p ro te ctiv e

d iffe re n t

m a in ta in in g

d e p re ss io n

fe w

adept

T here

en acted

th e

made

in

d e clin e

o b je cts

p o s sib le
lik e

by

wage

re d u ctio n s

a lth ou g h

was

th erefore,

a

oth er

co u n trie s,

and

of

have

p rice s
not

fo r

fo llo w e d

re d u ctio n s,

ce rta in
it

d e la y

may b e

m a n u fa ctu red
th e

th e

m ovem ent

c o m p e lle d
cost
as

th at

th e

liv in g

com pared
th is

p rod u cts.
in

of

cer­

d e la y

The

p rice s

p rice s
of

raw

m a te ria ls
It

may

is

have

en a b led
e a s ie r

in a sm u ch

d iffic u lt

been

an

as

to

th e

say

o b s ta cle

to

n ote

th e

la tte r

to

in

in d u s t r ia l la b o re rs
slo w in g

to

a

w o rld

d e clin e
O w in g

has

war

in

to

th e

th is

decreased.

to

a

grea ter

to

f i l l

th e

not

v ie w

exten t
ranks

up

in

th e

la b o r

ranks;

and

e q u ip m e n t

has

ra p id ly

of

in cr e a s e d

cost

rig id ity

c o n s u m p tio n

m anner

th e

of

of

w ages

because

liv in g .

It

p rice .

it
is

F actors.

in

th e

p o p u la tio n

th e

ever

d om estic

been

of

exports.

re su lte d

fu rth erm ore,

have

part

r e la tiv e

of

th e ir

P o p u la tio n

th e

th an

of

th e

d e v e lo p m e n t

m a in ta in

o n ly

lo s s

of

hum an

liv e s ;

it

has

le d

ra te.

fa ct,

In

fo r

exten t

to

o n ly

b irth

fig u re

what

th e

7.
The

7 -

fa ct

th e

and

v ie w

of

la b o re rs

who

la rg e r

th e

fa ct

th at

co u ld

lie s
not

sam e

te rrito ry

in h a b ita n ts

in

th ou gh t

co n su m p tio n

th e

w om en

of

th e

w ith in

num ber

fo re ig n

la b o r

p e rfe cte d ,

w h ile

th at

b e fo re

in

liv in g

cam e t o

num bers

F rance

have

in d u s tr ia l

near

th at

fo llo w

in clu d e s

en tered

p la n ts

p rod u ction

a. p a r a l l e l

d e v e lo p ­

m ent .
U n fo rtu n a te ly ,
to

p ro d u ctio n ,

th e
in

d iffe re n t
th e

n e a rly
du stry.
to

th e

so

th at

exact

in v e s tig a tio n s

it

not

in d u stria l

cu ltiv a tio n
p a ra lle l
th e

no

and

d evastated

le v e l,

has

th e

m a n u fa ctu re

now
of

p o s sib le

branches.

w h ea t,

course;

iu .T i

w ar

of

is

in

steel

re g io n s,
exceeded

In

as

in d u stry ,

a u to m o b ile s,

m ade

fo llo w

m in in g

in

le v e l.

d e v e lo p e d

F rance

its

of

th e

fo r

have

regard

in s ta n ce ,

th e
w ere

in d u s tr ie s
of

a

sugar

in ­

r e s tricte d

m uch b e l o w

b a sis

th rou gh

fo llo w e d

co a l,

was

O th er
on

as

o p e ra tio n s

1922

w ith

d e v e lo p m e n t

resp ects,

c h ie f

w h ich

in

c o n s u m p tio n

th e

w hose

prew ar
have

and

in

p ro d u ctio n
th e

to

ce rta in

p ro d u ctio n

oth ers,

are

th e

such

pre­

as

in cre a s e d

needs.
N e v e rth e le ss,
in

1927




and

when

b e g in n in g

in

th e

p rice s

1928

a

of

th e

slo w in g

up

v a rio u s
in

goods

began

co n s u m p tio n

was

to

d e clin e

n oted ,

no

8

steps

w ere

ta k en

sum ers,

and

case

of

te x tile

th at

operate

D u rin g
th e

in

E n g la n d ,

raw

e sp e cia lly

fir s t
u n it

con verted
w ith
even

regard

th e

stock s

d u rin g

th e

fe w

exceed

th e

v a lu e

fir s t
of

fa ste r

of

ta xes

c h ie fly
th e

and

a g a in st

fo re ig n

slo w in g

up

co u ld




a fte r

im p o rts;

w h ich

to

th e
o f

to

com m erce

and

o b ta in e d

d u rin g

th e

oth er

callfcB d

but

to

th e

le d

th ose

th e
branches

to

sin ce

ETC.

The w h o le s a le
regard

June

Then,

in

a

26,

to

sin ce

1926,

th e
of

it

4%

in

in d e x

French

in d e x

in

1924,

The
our

1922;

have

th is

progres­

need

trad e

exports

exports

d e clin e

p rice

d e clin e d

1928.

d e fic it

o f

p e rio d

and

of

th e

and

have
made

have

m a n u fa ctu red

too
o f

purchase
fo re ig n

th e

a

fo r
b a la n ce

began

to

a p p a re n tly

co n s id e ra b le

charges

d evastated

ta xes

fa cts

fo r

re q u ire d

a d d itio n

T hese

am oun ts

refu n d

in

p ro g re s s iv e

d iffe re n ce

fa c ilit ie s

These

w ith o u t

acu te

hand,

fo r

a

th e

su b se q u e n tly

in te n s ifie d

co m p e titio n .

be

war

cover

lo a n s .

necessary

co u ld

and

re co n d itio n in g

war

con­

•

exoort

had

to

in sta n ce ,

im p o rts.

th e

be

cre d it

r e s tricte d

w ith

goods,

fo llo w in g .

A lth o u g h

th e

fo r

p e rio d ,

s ta b iliz e d ,

th e

ex p orta tion s

On

as

abroad.

show ed

1926

been

our

em ig ra ted

was

1 9 2 2 -1 9 3 0

sam e

to

of

r e g io n s

d e clin e d ,

e x p a n sio n

up

had

th e

fo r

th e

th e

reduced

se rv ice

in d u stry

in cr e a s in g

co n su m p tio n .

fra n cs,

years

th an

S ta b iliz a tio n

in su r e

by

p ro d u ctio n

d ire ct

of

to

in cre a s e d

re p le n ish in g

tracted

for

in to

fra n c

of

and

fa v o re d

th e

in cre a se

la tte r

m a te ria ls

h a lf

a fte r
4

decreased

th e

MONETARY AND F I N A N C I A L F A C T O R S , I N T E R E S T R A T S ,
th e

e sta b lis h e d

siv e ly

of

m a te ria ls,

m on etary

d iffe re n ce

s tim u la te

im p o rts

C.

of

to

on

lo a n s

re g io n s

in cre a s e d
d iffic u lt

u n d o u b te d ly

th e
our

a

and

con­
to

expenses
stru g g le

part

in

th e

prod u cts.

th e r e co n s tru ctio n

m uch d i f f i c u l t y ,

of

yet

th e

m uch

devastated
c a p ita l

in fla tio n .
of

fo re ig n

lo a n s ,

exchange

a lso

le d

to

fo r

paym en ts

o u tg o in g

th a t

sh ip m e n ts

9
of

curren cy

w h ich

of

curren cy

h e ld

gone

abroad

co n tin u e d
in cre a se

in

th e

cam e b a ck

in cr e a s e
in

th e

P rosp ects
in te re st

fo rtu n a te ly

rate

co u n trie s.

has

been

has

been

creased,

of

th e

and

e n ta ile d ,

if

th e

have

p a n s io n ,

it

no

in flu e n ce

or

at

w hen
fis c a l

th at
upon

th is

to

a

Bank

of

F rance

ca p ita l
equal

p e rio d ,

6-J- a n d

of

le ft

th e

pu rchase

ca p ita l

exten t
w ith

th e

a

le d

th at

to

had

th e

co rre sp o n d in g

th en

th e

not

p ro m isin g ,

what

it

was

flu ctu a te d
to

4,

3

and

in

2 <J>,

appears,

in

fin a n cia l

It

fo re ig n

w hen

oth er
5

and

cou n try

th e

th e

betw een

F rance
th e

fo r

th is

and

c o u n trie s

and

p o litic a l

co n fid e n ce

de­

in cre a s e d .

French

th e

to
it

c o n fid e n ce

charges

on

th e

la rg e

w ere

m ovem ent b e tw e e n

it

th rou gh

s ta b iliz a tio n ,

m ost

to

ca p ita l

w e ig h e d

appears

fo re ig n

re s u lt

cou n try:

retu rn ed

H ow ever,

oth er

th e

fo r

is su e d .

d e clin e d

ca p ita l

e sp e cia lly

situ a tio n

it

th e

th e

sta b iliz a tio n

it

com pen sated

A fter

in

n otes

lo w e r

th e

S u b se q u e n tly ,
th at

cash

of

be

cou n try;

in v e s tin g

B e fo re

th e re fo re ,

th e

th e

am ount
fo r

cou n try.

to

of

co u ld

caused

th e

p ro d u ctio n

m on etary
present

by

or

war

and

fin a n cia l

d e p re ss io n

and by

th e

in te r fe re d

w ith

circu m sta n ce s

except

to

lo a n s

lig h te n

w h ich

its

have
its

ex­
had

e f­

fe cts.
D.
(a ).P r ic e s

of

P R IC E S ,

WAGES,

Raw F o o d s t u f f s ,
and

P R O F IT S.

Raw M a t e r i a l s ,

F in ish e d

S e m i-m a n u fa ctu re d

A rticle s .

I
From

1922

in cre a s e d
year
is

to

to

d o lla r.

S tates

th e

1930,

1926,

th e

when

H ow ever,

co n s id e r

It

th o

as

general
it

1926

was

q u otien t

of

th en

re a liz e d

year

w hen

th e

w h o le sa le

reached

its

h ig h e st

lik e w is e

passed

its

w h o le sa le

reached

is

a lso

E n g la n d ,




to

year.

w e ll

1925,

up

to

th at

th e

m arked
th e

th is

m axim um .

m axim um ,
by

in d e x

an

in d e x

and

when

in d e x ,
has

sin ce

th e

reached

as

a fte r

e x ce s siv e

th rou gh

q u otien t

p rice

v a lu e

p rice

th e

in d e x

d e clin e d

from

in fla tio n ,
q u o ta tio n

its

com pu ted

h a v in g

in
as

m axim um
th e

it

of
in

U n ite d

com pu ted

in

th e

10

Also in 1926 (or 1925) the index computed separately for foodstuffs
and the index computed ^or industrial products reached their highest levels.
Among the foodstuffs, the prices of vegetable products increased at
first faster than the prices for animal products; the latter then continued
to increase while the former declined.

For instance, the price of wheat

on the Paris market rose from 78.90 francs per quintal in 1922 to 188.70
francs in 1926, and declined again to 150.35 in 1929, whilst the wholesale
price for meat in 1922 changed from 6.00 francs in 1922 to 9.40 in 1926,
9.90 in 1929 for beef, and from 8.20 in 1972 to 13.35 in 1926, and 15.00
in 1929 for veal.

Other animal products have, of course, followed a simi­

lar movement even as the movement for the various vegetable products fol­
lowed that of wheat.

As to colonial products, the maximum was reached

either in 1926 or 1927.
When the price decline set in in 1929-1930, the tariff on wheat was
raised to 80.00 francs per quintal, equal to the price for foreign wheat
which is thus practically doubled.

Furthermore, certain milling regulations

favored wheat cultivation to a variable extent for the purpose of inter­
fering with speculation.

The prices ""or industrial products do not bear

as high duties as agricultural products, and therefore generally follow
world prices.
As for textile materials, prices have generally increased from 1922
to 1926.

Apart from flax and hemp which were quoted at higher prices, the

rest of the materials such as cotton, jute, wool, silk, began to decline
beginning in 1926 and up to the present, excepting wool perhaps, which
latterly has been quoted somewhat higher.

Prices for mineral products

have decreased since 1926 with alternative changes of rise and 'decline;
rubber has declined considerably since that year, and this is true of
hides and leathers which were quoted at their highest in 1926.




- 11 -

Prices for semi-manufactured products after having generally declined,
have again been quoted at higher prices since 1929, as for instance com­
mercial iron, alcohol, gasoline and paper.
Rates for gas and electricity have been lower than before the war as
may be seen by computing these rates into gold values and yet the price of
gold, calculated on the same basis has increased.

Likewise, transportation

cost by rail or by water has not increased to the same extent as the raw
materials or finished products.

As it is very difficult to appraise whether

finished products of the same name are also of the same quality, it is hardly
possible to compare their prices for different periods.
However, for some domestic articles, v/e get a significant indication
when we compare retail prices with wholesale prices of the material used
in manufacturing the finished products.
(c) Wholesale and Retail Prices.
The wholesale price index computed on the basis of July 1914 having
risen from 354 in 1922 to 718 in 1926 and then declined to 543 in 1930,
the price index of some domestic staples, sold at retail in Paris, changed
from 331 in 1922 to 554 in 1926 and 618 in 1930.

This retail price stopped

rising only at the beginning of 1931.
However, this comparison bears not upon the same articles.

When we

compare the wholesale price index for material incorporated in the articles
used for the computation of the retail price index, the difference is much
smaller.

For instance, during the first half of 1928, the wholesale price

index for these articles was 596, while the retail price index reached only
612, or a difference of 2.5% only, which can be explained by the fact that
the cost for wages, taxes and general expenses had increased a little more
than the cost of the materials themselves




- 12

(d) Wages and Agricultural Income in Export Industries and in
the Industries Manufacturing for the Domestic Market,
In France it is hardly possible to follow the changes in wages except
for laborers in coal mines and in the small industries (housing, small
industries, etc.)
borers,

We have, however, some data regarding agricultural la­

From the totality of these data there seems to result that agri­

cultural hands have had their wages increased from 25 to 30$ from 1924 to
1928 in the same or in about the same proportion as the quotation of the
dollar.
As for workmen engaged in the smaller industries, it is possible to
estimate that, on the basis of daily wages paid in 1911, the subsequent
figures represent 4 in 1922, 5.8 in 1926, 7.3 in 1930, or an increase in
excess of that in the value of the dollar.
As for coal miners, the daily wage computed for the totality of their
number, was in 1922 3.5 times that paid in 1913, and in 1926 it was 5.2
times, in 1930 5.8 times, that paid in 1913.

Thus, in a general way, the

rise has slightly exceeded the increase in the value of money, but it has
remained below that of the cost of living.

It is true that in certain

regards advantages are now added to the wages (family aid, annuities, etc.)
As for a distinction between industries engaged in the export business
and those engaged in the manufacture of articles for domestic consumption
there is hardly any such difference in France.

The movements we have just

outlined are chiefly applicable to industries of the second class.

But

many industries are engaged in production, at the same time, for national
consumption and for export.

There is nothing to indicate that the 7/age

movement is influenced by either the one or the other of the markets.

For

international competition bears as much upon exported products as upon
products consumed within the country.

When, for instance, wages were re­

cently reduced in the coal mines, this resulted from the pressure of the



-13competition of foreign coal and in spite of the fact fhat France consumes
all she produces.
(e)

Industrial Profits.

When the prices of raw materials declined, as has been the case in
France since 1926, the balance sheets must take into account such depres­
sion, and profits are to that same extent reduced.

On the other hand, a

decline in price for agricultural products diminishes the returns of the
farmers and their purchasing power.

Lastly, a decline of prices generally

creates a tendency to diminish purchases, everyone hoping to buy at an
even more favorable time.
We can hardly have any idea of the variation occurring in industrial
profits except by noting the dividends distributed by joint stock companies.
Nevertheless, the variation in these dividends gives us but a short view
of the variation of the profits.

Indeed, even as in France, an effort is

made to regularize wages by circumventing rapid rises and declines, even
so efforts are being made to regularize dividends, by increasing the re­
serves in the prosperous years and by deducting, if need be, from those
reserves when the profits decline excessively or are wiped out altogether.

II. Change of Direction of the Present Cyclic Movement. Suc­
cession and Interrelation of the Different Statistical
Series Dealing With Speculation, Prices, Produc­
tion, Unemployment, Consumption ,Trade, Rate
of Interest and Capital Movements.
To study these changes it is best to trace curves or to juxtapose in­
dexes.

We shall elect the following indexes:

Speculation and Price. -

Speculation may be engaged in with regard to

many articles, especially goods, securities, bonds, etc.
The movement of speculation bearing upon the one or the other of these
objects is sufficiently characterized: 1*. By the change in the value of




-14these objects; 2* . By the change in the quantities contracted for in
a certain number of objects remaining always the same; and 3* •

By tho

changes in the stocks of these articles.
»?e shall consider in each group, simultaneously, a total of objects
and a particular kind.
As regards commodities, the index computed by the general statistics
of France for 45 years, the quantities of which are sufficiently definite,
characterizes sufficiently the movement in the wholesale prices. Unfor­
tunately, we have no information regarding tho quantities contracted for
nor the stocks of these commodities.
As regards stock exchange securities, the index computed by tho gen­
eral statistics of France for a large number of such securities is a sa­
tisfactory index.

Only, in Franco we do not have information regarding the

quantities dealt in nor the amounts offered,

"’c can nevertheless get an

idea of the activity of such negotiations thro>ugh the amount of taxes col­
lected on stock exchange operations, by taking into account the changes in
the tax rates.
As a special item we shall take the quotations of the stocks of four
business banks.
Production and Unemployment. - For a long time we have had in France
no investigation regarding industrial production, and agricultural produc­
tion is estimated for the chief harvests.

V/e know what the production is

for some products:
Mineral fuel, ores, cast iron, steel, sugar.
In spite of the insufficiency of such investigations the General Sta­
tistics of France computes an index for production based on indirect data
that may be used in the different branches of activity*




-15Again, we have no periodic investigation regarding unemployment ex­
cept such data as are furnished by the five-year census.

That we may get

some idea of the importance of unemployment, we can but ascertain the re­
stricted number of unemployed aided by unemployment funds or we may make
use of the indirect indication furnished by the statistics of public em­
ployment offices by noting the changos between the ratio of jobs secured
and the number of jobs applied for.
We shall keep this latter index and the general index of production by
adding to it the special index determined for the textilo industries.
Foreign Trade, Domestic Trade. -

As an index of foreign trade we shall

keep track of the movement of raw materials imports and the movement of manu­
factured articles exported.
As index of the activity of the domestic trade wo shall use the daily
number of loaded cars.
Interest Hate, Capital Movement. 7/e

To characterise the interest rate

shall note the index of the interest rate on securities with a fixed in­

come, the discount rate of the Bank of France, and the rate of discount for
first-class securities other than bank securities.
It is difficult to watch and note capital movement, since a telegram
or a telephone message will suffice for sending out or reimporting a con- *
siderable amount.

Movements of long duration may be appraised by the vari­

ations in the cash of the Bank of France and by the amount of our deposits
abroad.




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(2)

(3)

(4)

(5)

(6)

(?)

(3)

1922
1923
1924
1925
1926
1927
1920
1929
1930

419
312
26G
244:
165
503
203
203
203

335
426
499
561
713
630
634
623
546

234.2
409.8
343.3
341.2
500.4
471.7
441.7
472.9
467.5

119
172
203
200
233
287
415
507
437

140
164
169
140
163
212
397
399
320

256
518
648
832
1.520
1.257
2.417
2 . W
894

78
88
108
107
124
109
127
139
140

34
83
85
85
94
90
99
92
85

1929 J
3?

202
202
202
202
202
203
203
203
504
204
204
204

642
652
653
640
203
623
626
609
610
502
596
588

450
475
475
475
475
475
475
475
475
475
475
475

543
548
535
518
512
491
497
501
crJ
nLv
q~.
^
489
461
463

513
508
447
391
382
333
371
330
inn
ou
o
357
339
334

2.546
■£*-5.°.Q
2.615
2.108
1.342
1.687
1.560
1.292
1.860
1.739
1.844
1.622

137
136
133
139
139
141
139
139
138
141
143
144

97
96
94
S3
95
92
88
87
90
91
91

204
203
203
203
203
203
204
204
203
203
203
204

576
576
565
561
553
544
549
543
535
519
504
498

490
v90
490
490
490
490
490
490
490
490
400
310

495
479
473
436
462
437
440
424
425
395
373
349

333
340
339
361
345
315
320
307
309
290
281
270

1.475
1.550
1.182
1.304
1.054
790
640
331
691
602
605
503

144
143
144
144
144
144141
139
137
136
135
134

37
38
85
87
86
87
32
30
30
34
86
85

O

c
rH
r
-H

O
CD
ft
r-1
Co
Years
(i)

U

A
II
J
J
A
S
0
IT
D
1930 J
F
H
A
11

J
J
A
S
0
IT
D




•

p4

CD
i
—1

Vi

O
CD
O
•H
ft

cd

7!
ft
CD
P
CD

0)

?5

liervt production (in
.illion hodoliters)

ft

ft
o
•H
P
d
-p
o
2,
c!cu
ft
-P CD
•H >

(10)

85.1
96.8
101.6
118.6
83.6
101.1
99.5
113.2
33.1

(I)

(n)

(14)

Co

'3 .
d M
Q -p
5 O
. P*
o o
d
W p1
ft
d *d
0 0
Fd
1'
ift
(15)

(15)

1922
1923
1924
1925
1926
1927
1928
1929
1930

31.9
38.6
45.0
48.1
52.5
52.9
52.3
54.9
55.0

1929J
r
M
A

4.5
4,2
4.6
4.5
4.4
4.5
4.8
4.6
4.4
4.9
4.7
4.4
5.0
4.5
4.8
4.5
4.6
4.2
4.6
4.4
4,6
4.7
4.4
4.5

M
J
J
A
S
* 0
IT
D
1930J
P
M
A
M
J
J
A
S
0
IT
D

5.1
5.4
7.7
8.5
9.4
9.3
10.1
10.4
10.0
milers
de
T.
304
782
880
871
897
865
878
893
851
894
852
379
375
815
898
854
901
841
861
845
300
827
781
300

0
O
§
ft
ft
o
ft 0
d ft
Co d
Id d

314
317
261
293
65
215
315
233

14.0
25.8
25.9
29.4
40.4
33.4
33.0
35.1
29.3

13.5
17.7
26.7
29.2
37.8
32.6
32.1
31.5
26.9

3.17
3.61
4.59
4.47
3.34
2.98
2.34
2.52

(17)
£
5.08
5.00
6.08
6.50
6.67
5.13
3.50
3.50
2.71

235
211
230
318
356
365
396
392
418
292
262
256
212
207
209
239
252
307
312
283
298
213
143
116

3.2
3.2
3.1
3.1
3.1
3ol
2.6
2.4
2.5
2.7
2.3
3.1
2.9
2.9
2.5
2.7
2.5
2.4
2.2
2.3
2.0
2.2
2.2
2.2

2.2
2.5
2.6
2.7
2.5
2.7
2.7
2.4
2.6
2.7
2.6
2.9
2.3
2.5
2.5
2.5
2.3
2.0
2.7
2.0
2.2
2.2
2.1
2.0

2.35
2.90
2.97
2.95
2* 85
2.34
2.83
2.35
2.84
2.79
2.71
2.67
2.52
2.49
2.56
2.57
2.58
2.53
2.47
2.43
2.47
2.50
2.53
2.56

3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.
3.
3.
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5

1o

+3
w
d w
o 0
•H
0 +3
r3 d

(18)

w
d
•H
'd ^
rH W
O O
'a s
0 d
O ft
<3 d
ft *H
rH
ft rH
O *H
i.5
--- (19)

n3 W
Cj O
°
d 3
c3
Credits at
billion fz

(13)

t
o

f,t
~4
r3
o
o
w
•H

Discount ]
class sect

(13)

d
0
ft
cj
r
Pt
2
£=
d
d
ft

•1
H
d
3
O CD
0 8
wo
c
d d
o -H
cu >d
+3 0
gJ X
Interest ;
ties of f:

Years

£
o
•H
43
o
2 «
no o
o 43
d
ft d
o

Imports o:

*d ♦h
O rH
£h rH
.P,.H
rH
d d
O *H

Cast iron
(in milli

*—\
w
£ d
O o
•H 43
+3
O d
2 o

M
d
•H
rd •d
d 0
•H M
ft m
Gj
ft
O d
0
d rO
o
•H P
t *
o o
ft ft
o
d W
ftro
o
va tj

(20)

$

5.47
2.76
2.92
3.4o
2.33

3.4
3.4
3.4
3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.4
3.4
2.9
2.5
2.5
2.3
2.3
2.
2.
2.
} 2.
: 2.
j 2.

5.8
5.9
5.8
5.9
5.9
5.5
29.2
37.1
45.8

33.7
34.0
34.0
34.3
36.5
36.6
36.7
38.5
39.1
39.3
40.7
41.2
42.5
42.9
42.6
43.3
43.2
43.9
44.5
47.0
47.5
49.4
51.4
52.9

(A)
27.6
25.7

31.0
30.1
29,3
28.7
26.3
25.8
25.8
25.8
25.9
25.9
25.7
25.7
25.6
25.6
25.5
25.7
25.8
25.6
25.6
25.6
25.8

^
(1) Quotient of 518 for the dollar quotation - (2 ) Index of price movement
ior 45 a-rticles, basis 1901-10 = 100 - (4) Price of phosphorous cast iron at Paris
(5) Index of the quotations of about 300 stocks, basis 1913 - (7) Index of the tax
amount on exchange operations, with correction of tariff changes, basis 1904-13
— (A) Change in the vdue of the franc*



- 18 -

111, Nature of the .Present Depression.
(a) General Study - Comparison with Previous Depressions.

The movement characterizing the present depression does not in France
present a phase clearly different from all previous movements, outside of
the fact that external influences extend further with greater intensity
and greater speed.
However, when, for instance, we observe a phenomenon which incontrovertibly stands as

the source of all sudden changes of activity, to wit, the

movement of commodity prices or the movement in the stock quotations, we per­
ceive, at any period since the beginning of quotations, that is to say, of
wholesale prices since the close of the 18th century, successive fluctua­
tions, similar to those
times.

that the harvest results have evidence^ at all

They are similar in this sense

that instead of manifesting them­

selves with extreme irregularity as results of unforeseen events, they do, on
the contrary, over a certain period of time, evidence a certain regularity,
and assume the aspect of periodic fluctuations with variable periods and
amplitudes..
All groat pehnomena at the source of those movements, especially those
which manifested themselves a long time ago, are connected with the produc­
tion of things needed or simply useful in life.

When the duration of the

fluctuations does not exceed one year, the cause generally appears evident:
the change in the

seasons is

tho chief factor, as this change is regular,

at loast in point

of time, if not in extent, it is possible to foresee it

to a considerable

extent

and, consequently, it is possible to prepare for

its eventuality.
But fluctuations of longer duration are due to more complex influences.
The variations in harvests, for instance, depend on diverse climatic fac­
tors whose coincidence leads to very different results from one year to




-

19

-

another.
These fluctuations do not generally occur in the same years in the d i f ­
ferent countries.

For instance, abundant harvests in certain countries,

by reason of favorable clim atic conditions, are confronted by le s s abundant
harvests in countries not so favored.

A certain le v e llin g process takes

place over a certain number o f years, but in the meanwhile, while national
or international communications were d i f f i c u l t and slow, famines ruled in
certain regions while in others life -s u s ta in in g products existed in abun­
dance.

Progress in transportation and communication has done away with

famine generally speaking.

On the other hand, the development o f machinery

which made th is progress possible has increased human needs in various d i­
re ctio n s.

I t has opened up new ways to human a c t iv it y ; i t has singularly

m ultiplied the causes o f perturbations o f th is a c tiv ity and made th eir
analysis more d i f f i c u l t .
By confining ourselves to an experimental examination o f such move­
ments, we observe in tho f i r s t place th a t, among the many indexes o f the
economic sta tu s, that p articu lar index, the changes of which may be followed
over a long period o f time, and which, at the same time, plays a cap ital
part in the explanation o f cy c le s, is tho wholesale index price movement
o f the various commodities.
For more than a century, such an index has been computed in several
countries.

The process o f computation undoubtedly d iffe r s from country to

country, and even at d iffe re n t periods for one and the same country.

But,

i f we are w illin g to admit that the necessary connections have been i n t e l l i ­
gently established and that the variations recorded but roughly represent the
variations of the t o t a lit y of the prices o f things in the places o f their
ch ief exchanges, the follow ing observations cannot but be accepted.




(1) Since the close o f the 18th century, we have been able to observe

-20-

at le a st for England, the annual changes of the wholesale prices for a cer­
tain number of commodities, and to construct an index of these changes whose
flu ctu ation s vary from one epoch to another by period and extent*
(2)

By comparing the curves of such an index for three countries,

England, the United States and France, we observe that the fluctuations do
not generally agree one with another.
When they do not agree one with another, say, over one or two years, we
do not meet with any serious economic event that might a ffe c t general pros­
p e r ity .

The ready communications between countries to which we have already

referred makes compensations between d iffe re n t countries p o ssib le.
(3)

When the flu ctu ation s arise nearly at the same time and in the

same direction in the chief countries, such compensation can no longer be
effected and troubles of a certain gravity appear.

Such troubles arise

when phases of extreme tension in general a c tiv ity are followed by phases
of depression,
(4) Between phases of the sane nature the interval of years has never
exceeded 12 or 13 years, the cycle of troubles follow ing upon those phases
extending at a minimum to 4 or 5 years.
(5)

These cycles of short duration have superimposed themselves on two

cycles of long duration whose peaks may be chronologically fixed at the
close of the wars in the beginning of the 19th century, from the f i r s t
Franco-German War, and the World War.
It may also be observed that these peaks correspond to a certain break,
at those moments 7,T
hen the rate of the growth of precious metal stock is
h igh est.
(6)

According to these observations, independently of the cycles of

short duration, we have records of long periods of price declines (1815-1850,
1873-1896) with which the period beginning in 1920 is comparable.




-21-

These various observations, and the fa ct that the eoonoinic upsets noted
at other epochs, have been more serious than those of the present time, war­
rant us in concluding that in France the present depression phase is not of
a greatly d iffe re n t nature from that of sim ilar preceding phases.

However,

as in 1920, for reasons that the World War s u ffic ie n tly explains, prices
have reached considerable values, the consecutive decline may be naturally
greater than that in previous epochs not beset by such serious d i f f i c u l t i e s .
Furthermore, i t appears that in France we heeded the Turning conveyed
by the decline of prices which begem in 1926j France did not discount future
consumption by an exaggerated extension of c r e d its .

In addition, France

lacked the necessary labor to meet normal needs, and did not, through a
measured development of production means, increase beyond measure the manu­
factured products best f i t t e d to meet such extension®
(b)

Repercussion of the Depression from which other Countries
Suffered, upon the national economic situ a tio n . Mo­
netary fa c to rs, evolution of stock exchanges, budgetnry d i f f i c u l t i e s , cap ital market, t o t a l housing con­
stru ction , e tc .

There can be no doubt but that the acute period of the depression is
attrib u tab le to the stock exchange c r is is which occurred in the United States
in the F a ll o f 1929,
The decline of wholesale prices which began in 1926 might have l e f t the
impression in the United States that the balance between production and con­
sumption was threatened.

In sp ite of th a t, e ffo r t s were made to increase con-

4

sumption by developing cred it sales and by practicing betimes a reasoned pol­
icy of high wages.

In th is way future consumption was discounted and produc­

tion was decreased by lowering the cost p rice ; p r o fits increased at the same
tim e.

Hence, stock exchange speculation was stimulated by this increase; i t

attracted the cap ital from a l l over the world, either fo r security




-22r*

/ purchases or fo r investments at short term at a rate that could not

long be maintained, and the ca p ita l market reached the lim it .

When, in

turn, agriculture had to appeal to ca p ita l, liquidations o f secu rities
s w iftly followed, and the c r is is was f e l t in France even as in a l l other
countries.
We are ju s t ifie d in observing that, during the years preceding French
s ta b iliz a tio n , a large number o f French in d u str ia lists and merchants to
cover sales abroad without running the risk o f increasing exchanges, had l e f t
on deposit abroad considerable cap ital from which they n aturally sought to
secure a momentary revenue.

A fte r s ta b iliz a tio n had been e ffec te d , only

part of th is cap ital came back to France, and the part l e f t abroad found
fr u it f u l use, e sp e cia lly in the United S ta te s.
A fte r the c r is is the use o f th is cap ital has become much le s s p r o f it ­
able and was exposed to greater r is k s ; return to France o f th is capital
increased more and more as witnessed by the development o f the holdings
in the Bank of France.
Repercussion of the American c r is is on the Paris Stock Exchange was
immediate, but s lig h t ly f e l t at f i r s t , but i t has continued even to th is
day.

I t was shown e sp e c ia lly by a considerable decrease in operations, for

the decline of se cu ritie s with variable income has been r e la tiv e ly slow, as
the owners of depreciated values preferred to hold on to them rather than
be the victim s of the consequences o f the decline.
However, some speculative deals which had grown s w iftly and f a c t i ­
tio u sly during the prosperous period, ran into fa ilu r e s and in the collapse
follow ing dragged other enterprises along with them; fa ilu r e s increased, the
more so because the decline o f commodity prices began at the same time accontuated, and subjected enterprises that had held important stocks, to lo s s e s .
The decline of agricu ltu ral products e sp e c ia lly had paralyzed the markets




-23-

of industrios depending* on rural consumers.

The oxchango c r is is has wipod

out ontiro fortunes and the construction industry which had sw iftly devel­
oped during the prosperous period had to slow down for want o f takors.
L a stly, the repercussion o f those hard times on public finances,
upon railroad revenues and public u t i l i t y bodies, soon made i t s e l f f e l t .
Former surpluses were changed into d e f ic it s .

I t is time that the depres­

sion period be brought to an end, for the budgetary d i f f ic u lt ie s can be
solved only with d if f ic u lt y when the muddied state of things in terferes
with an increased tax and customs duty.
IV. PROSPECTS - OBSERVATIONS IN REGARD TO THE FACTORS
LIKELY TO AFFECT THE FUTURE ECONOMIC EVOLUTION.
Fortunately, the exarnplo of past depression periods enable 3 us to
look for a future improvement in the situ a tio n .
In the f i r s t placo, the cause of the present state o f a ffa ir s is to
be found in the decline of commodity prices v:hich has increased the needs
for cred it of long term, while at the same time i t tended to reduce the
margins of p r o f it .

The decline o f se c u ritie s followed th is price movement

only a fte r the lapse of a certain in te rv a l, even as happened in 1864-66
and in 1880-82.
Now, as fo r certain m aterials such as wool, price decline seems to
havo come to an end, i t i s , on the other hand, increasing with regard to
other m aterials.
Undoubtedly, the v is ib le stocks have not as yet decreased; they in­
creased with regard to certain products because the operating companies trie d
I

to maintain th eir personnel, while purchasers are holding back in the hopo
that they may la te r on purchase at even lower p r ic e s.

But the in v is ib le

stocks are becoming, lo ss as indicated by the slowing up in the imports of
raw m aterials.




Wo may, therefore, hope that the end o f the price decline

-

Is approaching.

24

-

Besides, protection afforded French agriculture provides

purchasing power to the rural population, a power which it had lacked in
1929-30, and as a resu lt domestic trade shows signs o f renewed a c t iv it y .
The fin an cial market continues stagnant, because foreign markets con­
tinue depressed.

However, there are signs o f greater a c tiv ity in other

countries both in regard to in du strial and commercial enterprises.
We need not look for an early r is e in commodity prices because, since
1920 we seem to have entered a period o f long price d eclin es, sim ilar to
that which occurred during the f i r s t h a lf o f the 19th century.

As observed

with regard to past epochs, th is does not interferes with momentary upswings.
When prices begin to r is e , domestic stocks w ill be replenished and
the v is ib le stocks w ill bo reduced; th is w ill lead to a new r ise o f a na­
ture to f a c i l i t a t e the establishment o f favorable balance sheets and to
stimulate the fin a n cia l market provided that the situ ation abroad does not
react unfavorably.
In th is manner, economic movements have followed one another ever
since i t became possible to follow and note them with some exactness.

The

great war undoubtedly stimulated to invention and to the perfecting of
production processes; but as we stated in the beginning o f th is report,
the same things were noticed in the time o f the Napoleonic wars.

Industrial

progress, development o f communication means have had so cia l re su lts com­
parable to those that we now n otice.

In one and the same country, the

trade currents have changed th e ir d irectio n ; the centers of a c tiv ity were
on the brink o f danger when now centers came into being and took the place
o f the older ones.
But today, the problems connected with the national plan and whose
solution was made easy because of the existence of a national structure,
are now transferred to an international base, that i s , on a base whose




II

-

structure remains to "be created*

25

-

As past experience also shows that

troublous events occur le s s frequently in periods o f slowing down, as in
the present period, than in eras of wide economic upswing, i t is permitted
to hopo that e ffo r ts tending to s ta b iliz e international rela tio n s w ill
meet with success, fo r , as has been stated already, the prosperity o f each
^ nation is clo se ly tied up with the confidence in the s t a b ilit y o f interna­
tion a l markets







to his attention u/on his return to the office

July 10, 1931.

Miss Catherine M. Dickinson,
Office of the Secretary,
Department of Commerce,
Washington, D. C.
Dear Miss Dickinson:
In the absence of Covemor Meyer, I acknowledge
receipt of your letter of July 9 enclosing a confidential
report on An Inquiry into the Economic Depression,— France,
which you have sent him at the req\»st of Mr. Hunt.
I know the Governor appreciates your courtesy in
sending this report to him, and I shall be glad to bring it
to his attention upon his return to the office.
Very truly yours,
(S ig n e d ) F. L. Fahy

Secretary to the Governor

\
>