ECONOMISTS AND THE GOVERNMENT

Press, Volume LXXI, Issue 21449, 15 April 1935, Page 18

ECONOMISTS AND THE GOVERNMENT

TO THE EDITOR 0? THE PRI93. Sir—l am glad to see your leading article in this morning's issue, and I agree with almost everything you say. Nobody appreciates the work of economists, or has benefited by it. more than myself. You are aware of the 10 years' association of our Canterbury Chamber of Commerce with the economists of Canterbury College, -which has beer, most useful and cordial. „ , . Most probably the usefulness of trained economists to the community in its infancy, and it is fair to assume that they will in future throw valuable light on problems which are Tiow obscure. But I eih doubtful whether a ring of them round a government—actually writing its • legislation—is either giving us, or is going to give us, sound and useful results. You are right in-saying that the types of knowledge of business people snd economists should function together; and it seems evident that if either of them becomes the power behind the throne the acts of government may be misdirected. I cannot recall any piece of legislation so partial as the Final Adjustment, Act, and as we know it is the result of the labours of a battery of economists, I was trying to puzzle out before our Economic Society its basis, motives, and objectives. Had it been shown by facts that rural mortgagors of all clashes needed help from the community in order to save wic'».r spread individual suffering; or that a large proportion of them needed help in order to prevent disaster to a national industry, then most people would have agreed with the Government's giving its help at a cost spread over the whole community by taxation in the customary manner; but the new principle of making particular fccple give help to certain individuals by being forced to continue to risk their money, and then to give compensation in addition, is, to my mind, sufficiently disquieting to warrant investigation. It is generally agreed that the moratorium of a few years ago had a very blighting c(l'ect on the whole community, but bad as it was it did not merely cover selected cases, nor did it give defaulting debtors a preferential charge on the assets belonging to their creditors. Further, when we know that the economists who are advising the Government are behind this legislation, but practical (and educated) men, many of whom with life-long experience of land, and mortgages, and finance, are against it for cogent reasons which they have advanced in clear terms, we may be justified in doubting the wisdom of the advocacy of further isolation of Government from practical, experience by a thicker stratum of economists. One of the simple tests I tried to apply was the effect on the Mortgage' Corporation Act (which is designed to assist the whole farming industry in its finance over periods of 50 years) of the Final Adjustment Act. which proposes to help some rural mortgagors over a period of five years. The former act cannot function unless borrowers, lenders, and the State can be relied upon for the meticulous observance of contracts to the end. It will get no share capital and no bond money, and will have no funds to lend unless this is certain. The latter act can function only if alters some contracts, and it is designed to so alter them as to make the lenders suffer financially. It justifies the fear that it may become the practice in future to promote legislation to alter existing contracts, whenever there is a time of U-ade depression. These two acts are twins. What bothers mo is the fact that the practical man can see the dilemma and realise its consequences, but the economists whii have formulated them have either overlooked these matters or have in mind some compensating factors which are not revealed.— Yours, etc., WM. MACHIN. April 12, 1935.