The Press Tuesday, November 18, 1930. United States Finances.

Press, Volume LXVI, Issue 20088, 18 November 1930, Page 10

The Press Tuesday, November 18, 1930. United States Finances.

Anticipations of a deficit, in the \ United States finances are borne out by the President's admission, reported iiv cable yesterday, and Senator t? moot's estimate of a shortage of ' about 182.000,(100 dollars. Enormous : binn as this is, it represents only four ; per cent, of the estimated revenue, and barely four and a half per cent, of the estimated expenditure; but the extent of the falling away is perhaps i best seen by comparing the surplus . estimated last year with the dc- ! ricit now estimated. Mr Hoover in : his message to Coneress on December ! Uh looked forward to a surplus of I 122.000,000 dollars, so that the de- ■ terioratioii amounts to probably I ;.;00,000.000 dollars. But even if •' Administration circles, as the : inessace said, have " abandoned all j hope " of avoiding higher inI i-jiue taxation, this does not mean thai either they or the taxpayers have to screw up their courage to meet ■ a desperate situation. Income taxation | in America is very low. 1 he (. hanccllor ; of tljr fxehequer. in the House o£ Commons early this month, ga\e the following comparative table of taxes nor head : £. a d ; Kritain ■ . •• 13 30 ; France .. •• 10 " » Germany •• 8 0 f ' ; Belgium . '■ '? | T~nite.d Staves • • b „ Italy ..4 U o i When Mi- Hoover delivered his llies " sage, taxation had already been tour times reduced since 1921, and on the strength ot a ei-.rplns ot '2'2.5.000.000 dollars for the year ended b'.st June and of the estimated surplus for 1930-31 he moved for a further reduction, to be effective on returns for 1929, due last March. If taxation is J stiffened, therefore —and it will not ! have to be stiffened more than a. little — J the taxpayer will lose only a small ! part of the concessions ho has received; nor will his grievance, the fact j that hs has to pay slightly more when

! it is harder to pay, seem intolerable ; fo the British taxpayer, who had i io pay two and a lia.lt times as much i nnd has almost torgotien what national j prosperity is like. A> for the 15'2.000,000 dollars of the deficit itseli. if it is not met in the normal way by a Stale loan, the foreign debtor can moot it instead of reducing (he Public Debt. That, in August, 391!). stood at '26,506,000.000 dollars, and in ten years had been Tedneed to 10,931,000,000 dollars. This huge and rapid reduction has of course saved the American taxpayer large sums in interest and helped to make industry prosperous by bringing taxation down. Mr TToover 'old Congress:

Experience has ihown thni each ieuiwtion in taxes has resulted in revenue in excess of the mathematically cn 111nuted return xinder the reduced rates. Undoubtedly an increase in tlie prosperity of business brought forth by tax reduction is partly responsible for this experience. Such reduction gives the taxpayer correspondingly more for Ihb own use and thus increases the capital available for general business. These words are worth thinking over in a Dominion almost paralysed by direct and indirect taxation. But if we look for an explanation of the check to America's prosperity, it is to be found partly in the folly that exploited a boom and was punished by its collapsc, and partly in the general depression of world trade, for which the policy of the United States, financial and industrial, is partly to blame. The steady drift of gold, to be immobilised in the Federal Reserve Bank vault?, has contracted credit and purchasing power; and it is not simply the position of the United States as a universal creditor that accounts for this, but a tariff policy as well, which has disastrously blocked the flow of world trade. A Berlin message, last Friday quoted 3 statistical return, showing that world trade for the second quarter of this year was 19 per cent, below that for the same quarter last year, and about 10 per cent. [£255,000,000] below the previous quarter; and the American trade figures showed the heaviest decline of all. For this reason, although Senator Smoot thinks that •' possibly certain tariff rates were not " sufficiently high" to bulanee the Budget, the widespread protests in the United States against the HawleySrnoot tariff are of great interest. Many of the higher rates were the victories of selfish interests, unsupported by either Party, Republican or Democrat, as a Party, or by the public, and regretted by the President, who insisted on retaining the provision of the original TTawley Bill for a permanent Commission with power to revise the schedule. Since the reorganised Commission will be able to exercise a gradually increasing influence on world trade, the views expressed by its vicechairman. Mr Alfred Pearce Dennis, before the American Academy of Political and Social Science, are worth

quoting-. •' National economic policy," I he said, " 'which takes no account of " international antagonisms will have "to. reckon with hazards not only to £ ' American export trade but to Ameri- " can business abroad. 7 ' Injustices in particular taiiii* rates should be scientifically corrected piecemeal as they become apparent, i£ \re are to build a sound economic policy into our national trade relations. We are coming to a new conception oi the economic solidarity of: the localities witliin the nation, also of the economic interdependence of the diverse peoples that dwell upon the surface of the planet. In our trade vrith the vrorld, we shall como to recognise more and more that we stand to profit by trading v.'ith, rather than against, our rivals. Probably not more than 20 per cent, of our commerce lies within the fie hi of destructive competition on either • side. In time, we shall come to regard foreign peoples in the light of customers rather than rivals. I These are sound principles, which, it I ibey nre soundly applied, will help to

relieve American difficulties by relieving those of the rest of the world.

Farmers and Politics. j TJio soundness of the advice given to Canterbury !armers lust week by the Governor-General was proved within twenty-four hours at a meeting the Farmers' Union in southland. ->ow it is further confirmed frum Auckland. In the hivercargill L ' ;lse iUI :l< -taeU 0,1 the Government by one delegate led to a defence of it by anolhe- delegate, and then to general disorder. In Hie Auckland case we have the prm mcial executive of the .farmers' I. m 0!J j denying knowledge of a " ;>latioim pie pared (according to a New Plymouth report) by the national executive t'oi submission to candidates at Hie nest Parliamentary elections. In both cases the situation is the .same: participation in party controversies has produced friction, and if persisted in will lead to strife and confusion. There is no other possibility —unless it can be imagined that all farmers all over the Dominion can be persuaded to break their present allegiances and enrol, and remain, under a new flag. I' armors will not do that, any more than merchants will do it, or manufacturers, or professional men. or wage-earners. To put the issue on its very lowest level, they are far too shrewd to do it. They know that they can get far more out of the Government —mit of every Government —and far more out ol tile rest of the community, if they remain farmers on!j" and not party politician*. | Or to put it another way. they know i that they have a national standing as ' primary producers which they would not, and never could, have as a political fact-ion ranged in opposition to other political faction.?, and competing with them for control of the public purse. But even if they had ;.><< enough sen-e to know these Lungs, they could never pain enough strength to coerce the rest of the public. The moment thc.y attempted coercion, the rest of the community would be compelled in self-defence to unite to resist them. The rest of the eommunity nmst unite, now t:> resist them, if it true that an attempt .i to be made to demand pledges from candidates which v.'ill contiicf, with their partv* allegiance and wiMi their duty to the rest of the public, N'o section of the community, however worthy i'.s ninis may be, can or will be permit:.ed to dictate to all other sec!inns: and even fanners, if they became dictators, would not continue to have wo?-fhy aims, farmers are a* free a.- anybody else to combine f.o iiirhf. their own battles and advance their own interests. They must do it if they are to survive as farmers and to provide the means by which Hie rest ot the community lives. But they must not attempt to do it by political combination or by

any kind of political coercion, or sup- J pose—ns only the foolish I'eiv do sup- j po?e- —that direct action is any more I lovely in farmers than it is ir. shearers or miners or swaggers, and jmy more j ir. bp (olrrr>tcd bv its victim-. » i The Railways , j W'beii S>ir Otto Xieineyt.-r spoke At | Auckland about the control of State | railways, he may not have known that I lie was controverting Air Veitcli. v.-ho | a few days ago, with almost tearful earnestness, upheld 'Ministerial or political control, and pledged his Party, as far as he could, to maintain it. But it does not much matter whether Sir Otto bowled the Minister over without seeing him in the way, or deliberately. The point of chief interest to the public, though it would be glad to be able to smile at something connected with the railways, is that the Minister is so very easy to bow! over. He is defending what it is desperately hard to defend now, and does not defend it with much address. Sir Otto believes that in modern conditions railways can pay only if managed with outstanding efficiency, unhampered by political influence, and he points to the example of countries where State management has been superseded by board management, in the hands of members qualified for the work by special ability, training, and experience. It would be easy to bring forward a host of expert witnesses from abroad to support this view; but, it will be enough to quote a single authority, a New Zealander. Only a few days ago, lecturing to an audience of railwaymen in Wellington, Professor B. E. Murphy said, " The " railways shpuld be as free from " political interference as the Bank of "New Zealand or the Public Trust " Office. In particular, railway oper- " ation should be divorced from elec"toral bribery. . . . Experience shows " that no political Party in New Zealand " is competent to control the railways." This is bold and sweeping, but it is unnecessary to stop and insert the saving clauses. Substantially that is the truth. But Mr Veitch claims that it will be possible <! to reorganise the " Railway Department and to do all the " things that are necessary to strengthen " its finances under a system of Minis- " terial "control." [ lihappily, it is political control that has ~laced the State railways in their present plight; and it is too much to expect, whatever Mr Veitch says, that political control will ever completely or for long free itself from the influences that warp its judgment and its policy. The single fact that the Government persists in building new lines, certain to add new losses to old ones and to increase the taxpayer's afflictions, is sufticient to show how little, in competence or courage, is to be expected of political control. The country may decide to continue it, as it lias a perfect right to do, if it understands the risks and is ready to pay the price; but there : should be no illusions about; the nature of the choice.