NATIONAL RECOVERY

Evening Post, Volume CXVI, Issue 65, 14 September 1933, Page 14

NATIONAL RECOVERY

DANGERS INDICATED

"A MISTAKEN THEORY"

"livening Post," September 14,

■ As will be seen in the cable dispatches Irom New York, published elsewhere, the. 'National Recovery Act of the United ' States is now feeling the strain on its ' labour clauses. Difficulties associated with 'putting the theory of the legislation to '< the test of practice, were not unteeseen \>y qualified financial observers in the j ,United States and were pointed out, but >i» i'av as the banks in general were con- { corned they expressed their best wishes 'for the scheme or plan and, once adopted, 'they undertook to support it to the. ut- , most of their power and resources. . The National City Bank of New York iin its latest monthly letter.fully discusses .the National Recovery Programme and in .doing so remarks that it is beyond ques■tion that "there is danger in any at.tempt to regulate business by control in the hands of the political government, '<juite aside from any possible relation to partisan polities. i UNSOUND IDEAS. "There is danger that unsound ideas • urged in all sincerity in the name of ( social welfare may influence its policies. Among such is the theory just now widely prevalent that capacity for production has '.so increased that the industrial problem ■is no longer how to enlarge the supply of comforts which all the people would ,2ike to enjoy, but how to fairly divide ia, limited amount of employment. This .theory is a mistaken one and will ham- ? per social progress." The writer regards the population oC the 'United States as comprising 10.per cent, with the highest money incomes and the rest only too glad to raise their scale of Hiring to the present level of the 10 per , cent, group. But the only obstacle to .realisation of this suggestion is not that there is only a limited amount of work to be done in the world, but that at present at is impossible to produce the quantities •of goods that would be required. PRODUCTION AND SALE. "Nominal wage increases in money {would not produce them, but there is reason to believe that the industries will do it, sooner or later, if permitted, and it is certain that if the goods are produced by the different industries in proper proportions and priced in proper relations, they will buy and pay for each other in the markets "and inevitably enter into the standard of living." "The fact that the industrial system (functions by an exchange of services of .itself disposes of the theory that there not be work enough for everybody. 'The people o£ this country would scrap1 • all their possessions every year or oftener for the sake of having the latest products, (if they Could pay for them with their own (services and had nothing else to do. It • hausting conversation as to talk about exhausting the possibilities of . exchanging conversation as to talk about, exhausting .the possibilities of exchanging services. Unstable prices and lack of employ'menVare attributed by the writer to disturbance of the balance of prices. Upon 'this point it is stated, "It is only as the ■abnormal disparities in wages and prices :are corrected that purchasing power can .■be increased. Since all groups in the sya,tem buy from and sell to each other and .nowhere else—virtually an exchange! oi products—a group which holds its prices above the normal exchange level lessens 'the ability of the other groups to take its •goods, with the result that trade languishes, consumption declines, unemployment occurs, and all groups suffer from cause—unbalanced trade regions." ■'■■*