CHECKING THE DRIFT

Evening Post, Volume CXIX, Issue 85, 10 April 1935, Page 19

CHECKING THE DRIFT

A POLICY* NOT PALLIATIVES

REABSORBING THE WORKLESS

(To the Editor.)

Sir,—The unemployed are always with us to a certain extent but of recent years very many estimable men and women, who in normal times could generally by their own willing capacity for work command a fair return for their services, have had unemployment thrust upon them and in consequence have been forced to live in very straitened circumstances. The position has been acute for the past four years and from the present outlook there is little likelihood of any appreciable improvement taking place in the near future. It is pitiful indeed that so many of these estimable citizens have nothing to look forward to and, like many other people, I have been watching for some indication of the statesmanship that would lead us eventually clear of the trouble. So far there appears to have been a lamentable lack of vision in dealing with the problem and so much of what has been attempted has been mi the nature of palliation only. The Government having set up an Unemployment Board now leans upon the board as a buffer to keep itself out] of trouble and does not make any effective attempt to grapple with the underlying difficulties and indeed in some of its measures has rather aggra-! vated them. • The Unemployment Board can hard-, ly be blamed for the lack Of definite progress. They are living too close to the problem for one thing and their ,work appears to be mainly the allocation and conservation to the best advantage of the funds placed at their disposal. They are following the treatment prescribed by the Legislature and they have no opportunity of doing effective remedial work. The only way of simplifying their task is for the Government to adopt a change of policy and remove many of the trading restricticms. It is after all the happiness and-well being of our own people which is at. stake.and it is up to us as a community1 to do something more than we have been doing. The problem in this case is now of -such dimensions that it is above a question of party politics and the whole position should be explored during the Parliamentaryrecess by a Committee formed from all sections-of the House. If they give of their best in. the interests of their fellow citizens they cannot fail but to be helpful in their conclusions and recommendations. ' „ ' ,• * To attempt any clear analysis of the position in the space Of a letter is too: much to be hoped for but I will refer to the. main factofS affecting the problem. As has been stated repeatedly'and is of course quite obvious this Dominion; is dependent almost entirely upon the income obtained. overseas from the sale of its primary products. To remain. nationally solvent "we must therefore keep within that income firstly in paying our overseas interest indebtedness and secondly by limiting our imports to the balance then available. If the'surplus is large we can buy more; if it is small we must restrict imports accordingly. '■'•' ■ Now m the years before-the slump we did not always do.this. Our imports in some years were altogether too heavy but the true position regarding our trade balance was obscured owing to the funds available hi London being inflated by loan moneys raised by the Government and local bodies. TRe Reserve Bank, since constituted, should tend to check this over-expenditure in future. When the slumpTcSffi§Tih£TGov6fnmeritr:^Was 'e*bn-" fronted with,,.i rapidly diminishing national income due to the sharp falling away'pit:'prices obtainable for our primary products and it became j urgently necessary to take protective measures against insolvency. This it 'did by going to the other extreme and the country is now struggling hard to j climb uphill with the brakes still pulled hard on.. / .-:_--.:: ;'- ■■ The main restrictive measure taken by the Government was to impose an artificial rate of exchange which in itself was sufficient to limit, our imports to the measure of our income and to ensure ■ our national solvency. The Government went further, however, and imposed heavy cuts on local expenditure, including interest, sal-aries,-and wages. This unduly restricted the amount of money in internal circulation and was the direct cause of the throwing out of employment of many people who could otherwise have been kept working profitably. As a result of the double restriction overseas credits in this time of acute distress, piled up _ta an enormous .figure and our liabilities were increased by having to pay exchange on our London commitments and to Teimburse the banks for then* loss on our surplus exchange. Customs, income tax, and other forms of revenue fell away and it became necessary to increase rates of taxation, and impose a sales tax and unemployment tax, thus adding to our difficulties. The unemployment problem appears to have been aggravated by the initial steps taken to'check-over-expenditure. Nothing could be done to reduce our London interest payments so the Government was left with two alternatives —viz., to impose an artificial rate of exchange or to curtail local capital and maintenance ..works and make drastic cuts in interest, salaries, and wages. Either the first or the second proposal should have adequately met the situation but the Government applied both and therein I think lies the root cause of the excessive unemployment troubles.' / There is no actual shortage of money within;the Dominion but the main arteries which provide for the full circulation oi money and the issue of credit have been restricted to an extreme degree and consequently the poor old patient is decidedly anaemic. Take off sot much of the restriction as is unnecessary and' unemployment will'largely cure itself. Given an effective Reserve Bank capable of applying the proper remedy to national over-expenditure and we. have no need for further drastic ' internal restrictions. \ ....... The time to lay by is-when we are prosperous, When conditions are bad we should use all our resources to maintain the general welfare of the whole of our people and not only one section of them. The accumulation of large excess credits in London during the past few years is in itself ah indictment of the policy which has been followed. When every additional penny in circulation here would have proved of benefit in keeping in employment our own hardpressed people they have been • asked instead to kneel on the cold altar of imprudent economy. Most thinking people realise the necessity for prudenit finance but when the tendency. to, over-economise becomes obvious it is necessary in the interests of the people that the drift be checked without delay. If some of the clogs to progress are now removed the unemployed will reap a more lasting benefit by being reabsorbed into their old avocations and the people as !a whole" will be happier for it. The initiative, however, must come from the Government.—l am, etc., PROGRESS.