THE ROOSEVELT PLAN

Press, Volume LXIX, Issue 20957, 11 September 1933, Page 12

THE ROOSEVELT PLAN

"Poor Imitation of Dominion" REVIEW BY MR COAXES The claim that New Zealand had very little to learn from President Roosevelt's recovery plan was made by the Acting-Prime Minister (the Rt. Hon. J. G. Coates) in his address at Akaroa on Saturday afternoon. Mr Coates showed how New" Zealand was definitely ahead of the United States on several matters included in the new industrial codes, and he pointed out the dangers of a nationalistic policy which ignored the rest of the world. The plan was for industries to present their codes of "fair" competition—compacts by which the Government allows them to regulate themselves in return for giving labour a lift. For instance, the textile code abolished child labour (this had not been done before), established a 40-hour week, fixed a minimum wage at 13 dollars weekly in the north and 12 dollars in the south. The regulations covered 67 per cent, of the cotton textile industry, and the remainder had to accept it or be licensed and forced to accept. The idea was that manufacturers should seek higher profits, not through increased prices, but by increased turnover. Obstacles to Success. The whole programme was moving consistently in the direction of a centrally-controlled national economy, and one isolated from the rest of the world. Mr Coates said he considered that this would be one of the greatest obstacles to success. Although the foreign trade of the United States of America was only 6 per cent, of the total trade, it was of vital importance to the economic health of that country, for many of her products had a world market and a world price which was subject to conditions largely outside America's control. So long as America had any connexion with world markets this would be so. In addition to this it had been estimated that 30 per cent, of the industrial workers of the United States depended for their employment on their industries working at nviximum efficiency. So great were overhead costs that, if industries did not get a full export market and work to full capacity, in many cases they could not produce at a profit. The result was stagnation and unemployment. ! Under the Recovery Act, trade associations could apply to the President for codes of "fair" competi- [ tion. This allowed: (a) limitation of quantity produced; and (b) fixation of prices, below which members could not undercut. In return they guaranteed:—(l) The right of labour to organise (This had not bean recognised in many cases); (2) maximum hours of labour (In most cases hours of labour had not previously been regulated); (3) Minimum wages. (This also had not been guaranteed before). "A Poor Imitation." "It will be seen that the United States of America is now just offi-

daily emerging from the laissezfaire policy of economic medievalism, but even so the powers in the act only apply for two years," continued Mr Coates. "New Zealand had better conditions than these in the last century, yet Mr Holland says this is a new thing and advises New Zealand to imitate. The Roosevelt code is but a poor imitation of what we have had in New Zealand for years. Mr Walter Nash, being on the spot, recognised this and told his Canadian audience in Saskatchewan that the muchvaunted Roosevelt code had been operating in New Zealand for decades." The minimum wage that the textile agreement guaranteed was 13 dollars a week in the north and 12 dollars in the south. This merely indicated a comparison of conditions prevailing before this agreement. This was the first official Federal step to arrest the American rush to economic chaos. It was difficult to explain what 13 dollars a week would buy. for converting at the current exchange rate was quite unsatisfactory, since it did not take into account the still extremely high cost of liying in the United States of America. Rents were extremely high. Probably the best idea of living conditions in the larger cities could be gained by citing the Charity Organisation of New York, which estimated that the average city family of five needs 125 dollars a week to keep itself on

the "bare subsistence" level. Allowing for the fact that costs in New York were somewhat higher than elsewhere a minimum wage of 13 dollars for an adult was not comparable with the minimum wage in New Zealand. In other industries the minimum had been fixed a week at amounts ranging from 10 dollars to 15 dollars. And Mr Holland wanted to apply this system to New Zealand. Raising Costs and Trices. "Roosevelt's idea is to raise purchasing power by paying higher hourly rates, but with shorter working hours," explained Mr Coates. "By this means he hopes to start industry on the upward trend. But it must be remembered that he is also raising costs and prices. The question to be settled is whether any more goods will be sold. All we can do is to wait and wish Mr Roosevelt a fortunate outcome for his spectacular efforts. His administration is trying to put the United States where New Zealand was before our own legislative adjustments were made to meet the position. On public works, the United States Government, which, by the way, has had enormous and inevitable deficits for the last three years (in lfJ32 it was more than 2,000,000,000 • dollars), is now planning to spend 400,000,000 dollars on highway construction. A proportionate amount applied to New Zealand on a population basis would be £1,000,000. This should be contrasted with the Government's loan expenditure this year of £3,500,000." For unemployment relief the Federal Act of 1933 provided 500,000,000 dollars to relief schemes, one-half going to states and local bodies for the payment of up to one-third of wages spent on relief works. This was to be compared with the No. 5 and No. 10 schemes in New Zealand. There was nothing new; in fact, the American scheme did not go as far as ours. If New ■ Zealand spent a proportionate amount* she «w»uld>.be spending .only

£1,250,000, yet actually her expenditure was more than £4,000,00.0. Regard for New Zealand. "If we praise the American nitcmpt to meei the crisis, how much more must we hold in regard the action New Zealand has taken?" asked Mr Coates. "I do not want to underestimate what President Roosevelt is doing to meet the economic situation. I think I am covering all his lines of effort when 1 include his provision for increased expenditure on the navy and a small sum for loans for the purchase of subsistence homesteads. Compare our New Zealand small farms scheme. In addition, states and local bodies are also .helping with the unemployment problem, as are the equivalent authorities in New Zealand. The financing of the schemes is to be done by borrowing, by increased taxation, and by the leasing of public works when they are completed."