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E. Varga

Economics

The World Economic Situation
in the Fourth Quarter of 1922 [A]

(February 1923)

From International Press Correspondence, Vol. 3 No. 12, 1 February 1923, pp. 93–94.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

I. General Section
The general situation of world economics

It is difficult to make a general characterization of the world economic situation during the period of this report.

In the United States the favorable state of the market observable in the third quarter of the year has continued, although the consequences of the great coal-mining and railway strikes have not yet been quite overcome. Despite this, the state of the market may be designated as normally satisfactory; the best proof of this is the ever-growing movement among capitalists towards an amendment of the immigration laws, and the substantiation of this demand by the assertion that there is a labor shortage.

In Western Europe, in England, France, and the neutral countries, a very gradual improvement became noticeable during the last quarter of 1922.

As compared with this, conditions in Central Europe have become rather worse than better In Germany the depreciation of the mark has reached a point where the maintenance of production on the same basis as hitherto is hindered by the acute money shortage. The artificial stabilization of the crown in Austria on the other hand, led to an acute crisis in the selling market, and to enormous unemployment. Similar conditions obtain in Czechoslovakia. In Italy the situation appears to be unchanged: The effects of Fascist rule in the sphere of economics cannot yet be ascertained; the improvement in the Italian valute seems to be attributable to the greater faith placed by foreign capitalists in (he stability of the capitalist regime in Italy. On the other hand, the increased depreciation in rates of exchange in the East European countries bears witness to the lack of balance in the economic life of Europe.

As an index of the general economic situation, we append a table showing the development of unemployment in the most important countries.

Unfortuately at the time of the compilation of this report, the latest figures have not yet been published. When judging these figures, it must be taken into consideration that unemployment generally increases in autumn, due to the seasonal depression in agricultural and budding work.

The development of prices is also of interest in judging the state of the market. This development of prices is naturally greatly influenced by the fluctuations in the rate of exchange, and can aid in judging the state of the market only in countries with a fairly stable currency.

The development of the wholesale trade index figures during the last half year was as follows [1]:

It must be observed that the rise in price levels in the United States is real and corresponds to the improved state of the market, while in England the actual rise in prices, calculated on a gold basis, is covered by the improvement in the English currency which has taken place. The price quotations for France and Italy, and particularly for Germany, are influenced by the fluctuating movement of the currency. [3]

In order to render an approximate comparison possible, we append a table showing the development of the most important valutas, during the last quarter of 1922, as compared with the dollar and the English pound sterling.

The table shows that tn the course of the last quarter the English pound almost reached parity, as did also the Dutch and Swiss currency, while the Swedish crown (not quoted here) was above dollar par. On the other hand, the French franc has depreciated considerably, falling quite rapidly during the first half of January 1923. The same applies to the other Central European currencies. To judge by the development of the valuta, the gulf between England, America, and the neutral countries on the one hand, and the warring continental countries on the oilier, has greatly widened during the last quarter of 1922.

The development of the rate of exchange appears much more sinking when the values are measured by the English pound sterling, for the Central European currency has so depreciated that when measured in cents, it is difficult to follow the small fractions that result.

The French and Italian rates of exchange are particularly conspicuous, as well as the acute depreciation of the Czech, Yugoslavian and Greek currencies, the latter obviously the effect of the lost war against Turkey.

The movement of the rates of exchange is but very imperfectly characterized by these figures. During this period there have been fluctuations up to 30/40 per cent within a single week. To take Germany as an example, there were days in the middle of December when a ton of steel cost M. 100,000 more than the world market price. At that time this was the case with most goods, even with coal 20 days later, the dollar having risen from 5,500 in 9,500 marks the German prices were again considerably lower than those of the world market.

We are thus able to state that despite the improvement which has taken place in America, in England, and in the neutral states, the world economic situation in the last quarter of 1922, and especially at the time of writing, is completely chaotic.

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Notes

1. The data are from the Economist of 2 December 1922, with the exception oi those on Germany, and from Economics and Statistics, II No. 24.

2. January 5.

3. The American Federal Reserve Bulletin calculates the price indices of various countries on a gold basis. This of course enables us to follow the movement in prices with greater exactitude, But these reports are so delayed that they cannot be used for our surveys.

*

Footnote

A. Beginning with this number we shall print, in sections, the quarterly economic report of Comrade Varga.

 
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