TRYING PERIOD

Dominion, Volume 23, Issue 257, 26 July 1930, Page 26

TRYING PERIOD

But No Time for Pessimism RECUPERATIVE POWERS (By N.Z. Welfare League.) The thing to be guarded against at the present time is an excess of pessimism, just as an excess of optimism was the basis of danger a year ago. Undoubtedly the one viewpoint is as unwarranted as the other. It is true that the situation is not without -serious complications, including the world-wide scope of the reaction, the fall in commodity prices and accumulation of stocks of raw materials. We do not wish to minimise these difficulties, but we are impressed with the recuperative powers of the country as demonstrated repeatedly in the past. So long as prices are falling it is natural for buyers to hold off, both because of lack of confidence engendered by the fall and because of a desire to buy at the lowest possible levels. During this period of suspended activity stocks pile up in the hands of producers or primary distributors, where they require an exaggerated significance by reason of their being in the show window of “visible supplies.” Once, however, prices are believed to have touched bottom, and buyers who have been holding off come in to replenish their depleted stocks, it is often surprising how quickly the bugbear of excessive stocks is dissipated. It is a common saying that such and such a pegson could not stand prosperity, and experience has shown that the community cannot stand prosperity indefinitely.

A boom period commits errors, which have to be corrected and paid for, and the period of recession which follows is ii period of readjustment and reorganisation. Precisely how long this period of readjustment and reorganisation will take in any given instance depends a great deal on how much resistance is accorded to the forces working to re-establish an equilibrium. Since all business, in the last analysis, consists of an exchange of products and services, it follows that any group seeking advantages for itself in defiance of economic law by holding out against the trend, constitutes a diaturbing element which tends to retard the recovery of business as a whole. This has been proved repeatedly, yet such is the reluctance of mankind to b» guided by experience that there are always some ready to make the attempt anew. Nowhere is this realisation of the joint responsibility for maintaining stability i* industry more imperative than in the relations between Labour and Capital. There is an obligation upon both to hav« regard for the welfare and to work in good faith nnd willing co-operation to secure the largest and best results. Labour has a larger interest in real wages than in nominal wage rates, and wages are far more dependent upon fundamental conditions than upon any awards made by a court.