A BROAD BASE

Evening Post, Volume CIV, Issue 32, 6 August 1927, Page 17

A BROAD BASE

FOR SECURITY

DISTRIBUTION OF WEALTH

AMERICA'S EXAMPLE

A plea for better distribution of wealth as the best foundation for security is made in aii article contributed to ■ "The Investment Digest" by Mr. Hartley Withers, formerly editor of the "Economist"

It has so long been evident (he writes) that the best security for property is its wide diffusion, that it is rather surprising that the propertyowning classes have not been more eager to fortify'their own position by welcoming any.change which will increase their numbers from below. The economic strength of Prance, with her host of conservative, peasant proprietors, the stability of Switzerland, and other, countries where, the. distribution of wealth has prevented the appearance of glaring differences between possession and poverty, are an instructive contrast witft the recent experiences of England, which has seen her whole industrial fabric shaken ana dislocated fbythe efforts of those in 'the lower ranks of the social scale to improve their position; in the face of circumstances which made the attempt in-" opportune. Even in England, however, the country in .which industrial peace has been so gravely menaced, it is evident that • the improvement already secured in the distribution of wealth has gone far enough, to build a strong bulwark against the tid-3 of aggression that is fed by discontent. Discontent that tries to correct evils is always welcome, but when it proposes to correct them by measures that are likely to cause universal distress, the need for a bulwark becomes pressing. BANKRUPTCY FOR CO-OPERA- ; . TORS. At the Easter meeting at Leicester of the. British Independent Labour Party, one of the subjects discussed was the repudiation of the British War Debt. One speaker advocated that that part of it which, was dve 1 to inflation should be written off; there are obvious difficulties in the way of arriving at any satisfactory certainty as to how much of _ the War Debt would come under this definition, and so it was hardly surprising to find that a more full-blooded enthusiast cr.ma forward with- the view that the only way to deal with the War Debt was to repudiate the whole. As to the consequences of any such attempt on the economic position of any country which undertook it, and the inevitable . reactions on its productive power (and so on the supply of comforts and necessaries to fts inhabitants of every class) there is no need to dwell. Not only are they self-evident, but the enthusiasts of the Independent Labour Party, which might have risked such inconveniences in the hope of getting a better world out of the ruins of the old one, was brought up short by the awkward fact that its own political friends would be hard hit,- if any such madness came within miles of being practical politics. It was only necessary for one. of the delegates to observe that debt repudiation would make the Co-operative Wholesale Society bankrupt and inflict the same discomfort on practically every other co-operative society, and no more had to ,be said.

Thus we see that, as in agricultural countries, tho division of the land among a class of peasant proprietors is a se'euro foundation for economic stability, however great may be the surface fluctuations of Government and of political, parties, so in industrial .communities large accumulations of working, class capital in Government securities are the best defence possible against revolutionary measures of an extreme type, because they hit the classes to which revolutionary measures are most, likely to appeal. In other words, capitalist society needs to have a wide foundation and to be built like a pyramid with its base broadening out instead of like askyscaper, which rocks its head in every tempest.

CLEAR WAY TO THE TOP.

In the United States, at present the standing example of successful industrial development, we find that owing to high wages, steady prices, and the restriction of immigration, wealth is now so well distributed that there is said to be no practically popular opinion behind any attempt" to attack "big business." In that fortunate country the way up from the bottom to the top is so clear that those at the bottom are said to feel no envy or jealousy of those who have arrived, but to regard them merely as people who have gone further along a road which is open to everybody who will taks the necessary trouble and get the necessary share of good luck. The effect of this sentiment m smoothing out the relations of

different classes must be quite incalculable. But it appears from the report of the delegation which lately was sent_ by the British Government to investigate industrial conditions in America that it was only owing to a happy inspiration on the 'part of the American employers faced by the determined front of Labour, that industry took the path which has led it into its present favourable situation. "There is no doubt," says this report, "that in the first place the policy favoured and actually put into operation by employers for the purpose of recovering from the depression of trade in 1921 was a general reduction of wages. Whenever the organisation of the workers was strong, this was strenuously resisted, and with considerable success. . . . The resistance of the policy of wage reduction as an item in deflation was sufficiently great to enable other counsels to receive consideration.

. . . The policy changed to the reduction of costs other than by furtherwages reductions, and there was a concentration on increasing productivity and reducing costs and a general increase of efficiency which, with the maintenance, of the 'purchasing power of the people at the highest level, has had a fay-reaching effect on American industry generally."

NO RESTRICTED PRODUCTION.

This change of mind on the part of the employers has been helped in its effectiveness by, the attitude of organised labour, which, far from any attempt at restricting production "attaches," according to the same authority, . "the utmost importance '..,to the efficiency of management, . and-, to the efficiency of the workman so"'that he can develop the maximum ■of productivity without over-working or overexertion, and thus justify his high standard of living." In countries less fortunately situated than . the United States industrial problems are more complicated and difficult. But hope for a less uneasy future is encouraged by the growing recognition of the facts that high and well distributed purchasing power means a steady demand for commodities, and that a surplus out oi which the working classes may accumulate capital and investments is the surest' foundation for a society based on capitalism.