WORLD PARLEY.

Auckland Star, Volume LXIV, Issue 100, 1 May 1933, Page 7

WORLD PARLEY.

AMERICA'S PROBLEMS, FAULTY BANKING SYSTEM, ADDRESS BY MR. HEMnTCrWATf An unusual compliment was paid at the Auckland Rotary Club to-day, when Mr. W. H. Hemingway, who has returned to Auckland after spending the pact ten years as an economic statistician in New York, was invited for the second week in succession to fill the role of speaker at the club's lunch meeting. A week ago Mr. Hemingway dealt with the position of America at the World Economic Conference, and to-day his talk was on some of the obstacles which confront America as a party to that conference. Among these obstacles Mr. Hemingway enumerated America's banking problems. While America enjoys the benefits of the Federal Reserve system, this does not constitute a single central bank as, for example, does the Bank of England for Great Britain. Although under the advice of the Federal Reserve Board at Washington, the United States is • divided into 12 Federal Reserve regional districts, and each of these regional banks is practically independent with the right to set its own bank rate, subject to the board's review. Each also has control of its monetary gold reserves. Consequently, there is not the unanimity in banking circles in America as in other nations. Moreover, each of the 48 States has its own banking laws, and these it jealously guards. The State laws differ materially, not go much perhaps in banking principle as in banking method. Some of the State laws are loose and others rigid. America is also hindered by the law forbidding branch banking as we in New Zealand know it. As a result of these, and other facts mentioned by Mr. Hemingway, there is nothing like the confi-. dence in the American banking system among the Americans that there is among Britishers with the Bank of England. Such facts have led up to the hoarding of gold in America, [■ until recently it was forbidden by edict of the President. Recent withdrawals of gold in America from-the Reserve Banks were not so much due to the action of foreigners as to the Americans themselves, who sought to build up private ' reserves because of their lack of confi- • dence in the present condition of local 1 banking; Reconstruction Finance. Mr. Hemingway also dealt with the , recently formed Reconstruction Finance ( Corporation which, so far as regards , banking, he described as "a paradoxical form of Communism working in the interests of capitalism." He had grave \ doubts as to its ultimate success. Under it, advances up to 75 per cent of the 1 existing value of certain "frozen" ' assets, held by the banks, were made, ! but there was no guarantee that the value of these securities might not fall ' further, indeed "melt," and so leave the 1 American taxpayer to bear an enormous 1 burden. These possibilities without doubt had an influence not only on the > "pre-conference conversations," .- but I would make their weight felt at the "' conference itself. Men and Machines. Mr. Hemingway also dealt with the j menace of unemployment in America, explaining he meant its menace not so ' much from the fact that there were • probably 11,000,000 out of work at the '- present time, or that New York was i feeding 359,000 families a day, but » rather from what had been heard 'so • much about lately under the name of "technocracy." The menace of the machine had been with us a long time, and no doubt the "technocrats" exaggerated its evils on the workers, yet it . was serious none the less. In the older days Invention and improvement largely affected, isolated cases; to-day the marvels of invention and labour-saving machinery were to be found in all lines, and added to the troubles of displaced workers. Mr. Hemingway gave numerous examples, including the effect . of one invention on electric light bulb i producers. "Whereas in 1918 a com- . petent artisan could produce 45 bulbs . in a day, now—thanks to machinery— , he can turn out 74,000 in the same i time." In shoe making the present- , day artisan could produce as many shoes in eight hours as a few years ago re- , quired the labour of 250 men. Formerly a brick-maker could make some 4000 bricks a day, now he could in the I same time produce 400,000. The effect " on the labour supply »vas obviously 1 serious. Nor was that all. By some ' special treatment the modern chemist could produce leather which, made into I boots and shoes, would last four or five c years. Invention and improveemnt of • a like nature was taking place in many ! lines, particularly since the depressi-.'ii ' overwhelmed the world, for it was in ' hard times that some of the greatest • improvements took place—due primarily, 1 of course, to the desire to save money i and increase business 5 ! It was estimated that if America could suddenly 3 go back to the conditions which ruled r in the boom days of 1928-29 she still t could not absorb some 5,000,000 workers. Remedy in New Industries. The remedy, said Mr. Hemingway, obviously lay in the development of new industries, and it was satisfactory to • note there were several in the offing. Unfortunately, some of these provided substitutes for existing articles; still, » there was hope, particularly in the 3 plastics, metallurgy, chemistry, and , other lines. I Such facts, said Mr. Hemingway, were bound to have their influence on the attitude of America at the forthcoming . Economic Conference, especially in the matter of tariff reduction and immigration restriction. Meantime, things had s moved quickly, and since, he addressed 1 members of the Rotary Club a week " ago Mr. Mac Donald, the British Prime '• Minister, had been to Washington and a was returning to England after convert sations with the President of the United e States, which judging by the cable f reports indicated that the two great r English-speaking nations were likely to '-> approach the conference with similar 1 views and the desire to assist each i other.