MR SAVAGE ON SAVING

Press, Volume LXXII, Issue 21940, 14 November 1936, Page 10

MR SAVAGE ON SAVING

TO THE EDITO* 'Of THE PRESS. Sir,—The subject of saving is much deeper than Mr K. Lo vell-Smith dreams; indeed, although the brains of the world have, for the last hundred vears, studied its every phase and character, there is still much to learn. Politically, radical opinion has for a long time been mostly against saving. Our own Labour party was, before the election, strongly antagonistic, but there has been a subtle change noticed since in the views of certain Cabinet Ministers. The change is, I believe, genuine; and not due to the fact that when a man acquires something to conserve he naturally becomes conservative. It is vain to argue whether social credit believers were deliberately deceived by Labour or whether Labour members themselves have changed their opinions. I believe the latter is the truth; the financial advisers of the Cabinet have far too many convincing proofs for innocent Ministers to withstand. It must be remembered that Mr Savage for weeks past has been begging the savers from one end of the Dominion to the other to provide him with the huge sum of £13,930,000. Mr Lovell-Smith has noticed or read of the paradox of poverty amidst plenty during the period of monetary collapse, but while he may know the cause of the poverty he obviously has never troubled to study the cause of the plenty. There is ample proof that the growth of science and machinery is the cause of the plenty; but what was the cause of the remarkable growth of science and machinery? It is certainly not a coincidence that practically all machinery and commercial science have eyolved since the creation of the savings banks. Before that the radical mind had never an opportunity to exploit an idea, the conservative alone was in the position. The savings bank drastically changed all that. The aggregation of the people’s savings into continually expanding capital sums provided means for any person or group with an idea or an invention to test its value. And some of the greatest contributions have been from persons of the humblest origin, because perhaps those persons had the most to gain. Mr Smith may argue that the same results could have been achieved by a different method but that does not alter the facts; and centuries might have elapsed before a method was discovered. We see further than our fathers because we have our fathers’ shoulders to mount on. To discard saving now would bring real starvation, for the simple reason that the saving of money has a vast influence on the saving of goods; and a huge surplus of goods is necessary if distribution is to be constant and smooth. We can learn much from Russia’s experience. During the years that saving and interest were “taboo” there millions died yearly of starvation, but from the day interest was restored, improvement commenced and now Russia is beginning to know what real wealth is—the wealth of plenty. Russia found that the people would not conserve unless it were made individually worth while. National superannuation will prove superior to the old age pension because it is based on saving; and the pyramid fund will prove a powerful buffer to the shock of the next credit burst that the sheep-like people will surely bring when the lessons of the late collapse are forgotten. I hope Mr Savage realises the value of this virtue in the compulsory saving part of thp scheme. —Yours, etc., A. N. DAVIS. November 13, 1936. TO THE EDITOR Or THE PBESS. Sir, —The views expressed by your correspondent K, A. Lovell-Smith appear to me to be typically superficial in outlook. It is admittedly folly to deprive one’s-self of the necessaries of life and health for the sake of saving, but in a normal state of society there should be opportunity for saving by those for whom extravagance has no attraction. Money that is saved is not “tucked away,” as Mr Lovell-Smith suggests, but is used to finance business and enterprise and is retained in the country, whereas much of what he advocates would mean loss to the country with consequent financial , stringency. Thousands are kept in nonessential occupations by the patronage of the thriftless, which could otherwise be absorbed into useful production, making life easier for all. No doubt England and Germany would admit imperfection in their national economy, but if they wished to listen to the philisophy as expounded by Mr LovellSmith they could get it nearer home—from Soviet Russia. So long as there is individuality in us some will have the urge to save and others to spend, and it takes all sorts to make a world. Some of us' are brilliant and others not so, and can the latter be blamed for trying to make up to some extent by thrift what they lack in earning capacity? If Mr Savage is opposed to this, then by the same logic he must oppose any retiring income greater than the national superannuation provision he intends to establish next year, because anything additional is in the nature of savings. But he has assured the Public Service that its superannuation rights will, be respected, a source of income that already enjoys a distinct advantage in being treated as earned income for taxation purposes, whereas actually it is certainly no more earned than the income from private savings, which is taxed at a third higher rate. Private saving and investment in interest-bear-ing securities have been pinched at both ends by the forcing down of interest rates and the extra heavy income tax as unearned income, bufit may be said that the last Government had intended to remove the 33 1-3 per cent, additional impost on this class of income because of the reduction suffered. The attitude of the present Government is sufficiently explained by its expressed aim to make lending a State monopoly. Private saving has been substantially discouraged by the forcing down of interest rates, and when it is realised that countless depositors and life insurance policy-holders, as well as ordinary lenders, are adversely affected for the benefit of borrowers, it is extremely doubtful if this interest reduction fetish is in the interests of the majority. This conclusion has been forced on the citizens of the United States of America, where life insurance is the method by which tens of millions provide for their own future. If insurance funds lose in earning capacity, bonuses must be lower and premiums higher. The ramifications of private saving are so wide and complex that any interference with it would surely lead to economic disaster and could only be justified were the people of this country prepared to embrace complete State socialism, a contingency that is most remote.—Yours, etc., THRIFT. November 12, 1936.