ROOSEVELT PLAN.

Auckland Star, Volume LXIV, Issue 237, 7 October 1933, Page 11

ROOSEVELT PLAN.

ECONOMIST'S SURVEY.

IDEA BEHIND POLICY.

PROFESSOR TOCKER'S VIEW.

An exhaustive and critical survey of

America's Recovery Programme was made by Professor A. H. locker, a member of the New Zealand delegation to the World Economic Conference, in an address at the annual meeting of the Canterbury Employers' Association, states the "Press." He declared that he did not know that much could be taken out of the American programme that would bt; suitable for immediate application in New Zealand.

The general idea of the plan, he said, was to promote a revival of confidence in the hope that, once recovery began, it would be continued on its own momentum, but if it failed it could be stimulated by inflation. What he hoped would happen was that those countries in the sterling area which had carried out a policy of providing generous credit at low rates, would reap their reward by a rise ill world prices. If that did happen America would very probably win out. America had been very close to complete financial collapse. The reason why Mr. Roosevelt had been given practically a dictatorship was that things were so bad that the American people were ready to try gigantic experiments. The United States was a variable country, with a population of 12)1,000,000, and less than 5 per cent of its national income came from exports. Era of Prosperity. Between 1022 and IJJ29 the United States had a period of almost unbroken prosperity, with a. great building boom and a great stock exchange boom. In 1020 the stock exchange boom collapsed, and the depression hit America with extraordinary severity.

The National Industrial Recovery Act, Professor Toeker said, was passed only on June Hi, and it was being put into operation while he was in the United States. The Act decreed that a national emergency existed, and that it was to cease to operate when that national emergency ceased. It provided for maximum hours and minimum rates of wages, the idea being that hours were to be reduced and wages increased, and it also provided that employees were to have the right of collective bargaining.

The total expenditure provided for in the legislation pfissed for the reconstruction programme was about £450,000,000 or about eight times the amount of the total federal (Jovernincnt revenue last year. Applied to New Zealand on the same basis it would be equivalent to qn expenditure of about £200,000,000 to restore prosperity.

The country prepared for inflation to sonic extent because it knew it could not carry the existing debt on the present level (if prices, and the steps talcen had very effectively removed the banking panic and some measure of confidence.

The recovery that bad occurred so far had been quite considerable, due to the reaction from the very great panic aris-' ing from the banking crisis, the depreciation of the exchange, which bail raised prices in the United States, the rise in world prices and to the anticipation of inflation and of further price increases in America,

The idea behind the nutinn-wi<le movement for the reduction of hours q,nd the increase in wages was to enlarge the purchasing power of the people, hut ho argued that if hours were reduced and 'wages inoreased the labour costs of the goods would be increased and would bo reflected in the price of the goods. Employers Sceptical. Professor Tpcker said ho had asked big employers pf labour what they thought of the plan, and they were all very sceptical, hut were prepared to acccpt it, as they felt they had to get out of the mess somehow, and it was Mr. Roosevelt's plan. He had found the increases in wages and the reduction in hours fairly well supported by manufacturers selling their goods solely in the United States and not doing any exporting, but the people who depended to some extent on external markets were not so sure about it.

Generally speaking, the plan was very largely experimental. It was admitted that it was hastily cqnceived, hastily drafted and hastily passed, and it had to be subjected to the test of time. ,