TRACTS FOR THE TIMES.

Auckland Star, Volume LXIV, Issue 115, 18 May 1933, Page 6

TRACTS FOR THE TIMES.

HARSH JUDGMENTS.

(By PRO BONO PUBLICO.)

I have often heard the suggestion made that a depression serves one useful purpose in finding out weaknesses in business and industry. Last market day, for instance, a man who does a bit of buying occasionally, declared _ very positively that the depression was pushing out the fellows who were not fit to be farmers. He said it was tile same in business; there were plenty of peopie who were successful in times of prosperity, but the slump found out their weakness. This has never seemed to me to be very sound reasoning. It is true, perhaps, that some farmers and some business men go under quickly when the slump comes because they have not protected themselves against even one bad year, i but it is absurd to say that the men who have been so hard hit in the slump were all bad business men or bad farmers. There is one thing that every farmer must know, that the rain falls on the just aid also the unjust, and so does the slump. I know many very fine fellows, excellent, farmers, who have gone under in thits depression. One man, not very far from my place, put every penny he could spare into the improvement of his place, yet he is really no safer or better off than a neighbour who seemed to spend most of his time in town, and who visited every race meeting in the province and some in other provinces. Or take the case of another man I know who had his place clear of debt when the slump came, fie ha* had to borrow in ordev to carry on, and the debt is increasing because he cannot possibly pa 3' his way. Like every other farmer, he had to take chances, because it was utterly impossible to anticipate the course of the markets. There is another aspect of this question that concerns also business men in the cities. Where I think many men miscalculated was in not keeping their reserves liquid. They were working on a fair margin, and when taxation was comparatively low they were able to accumulate reserves that made their undertakings look absolutely safe. But when the time came to use some of their reserves they found that the only things easily turned into money were Government stocks. This is really one of the great lessons the depression has taught us, that reserves are not a sound protection unless they are liquid. -.Even first mortgages with an ample margin could not bo turned into money when money was what was wanted. Many farmers found to their cost that properties which they regarded as assets were really liabilities, not because of the slump in land values—though that also operated—but because their earning capacity was not equal to the charges upon them. So you f'-ould not be hasty in harsh judgments. Somi times it is asked what the farmers did with all the money they made in boom times. The answer in most cases is that they used it to clear* off liabilities and improve their properties or invested it in various ways in the expectation of being able to use it when bad times arrived. And when bad times did arrive their savings from the good times simply vanished overnight. -