CANDID CRITICISM

Evening Post, Issue 20, 23 July 1935, Page 12

CANDID CRITICISM

AMERICAN RECOVERY

"LONG. LIST OF FAILURES"

"Evening Post," July 23.

.In its review of the N.R.A. Plan of ' the United States Administration the Guaranty Trust Company of New York, one of the great banking institutions in the world, describes the venture as "one more instance to the long list of planned-economy failures ■throughout the world." "The idea that the labour of men and the rewards for that labour can be i arbitrarily directed by human agencies j more wisely and beneficially than by natural economic forces has been entertained since the time of the early Greek philosophers," the Trust's summary proceeds. "Yet the wreckage resulting from man's attempt to direct the course of economic affairs is so overvvhelmingly indicative of the hazards involved in such tampering .that thoughtful observers of business trends are at a loss to understand its continual recurrence. CAUSES OP FAILURE. "The failure of the N.R.A. to accomplish even a substantial part 'of the things that were hoped from it may be ascribed to two causes: first, it was based on a false conception of the in-ter-relationship of economic forces; and second, it is hardly conceivable that any group of individuals, and certainly a group small enough to per-mit-co-ordination, can have the foresight, knowledge, and energy necessary to direct successfully the elements in an economic system so complex in nature and so vast in scope as ours. It was obvious during the life of the N.R.A. that the organisation necessary to carry out the project was growing so large and unwieldy that frequently those within it were themselves confused', with the various departments working at cross-purposes on more than one occasion. "By increasing costs out of propor- . tion to the rise in prices, the N.R.A. cut heavily into the already lean profits of business, and industrialists, rather, than being encouraged to increase their production schedules, were forced . in many instances to struggle to maintain the standards set up by law. . ■ ' THE CONTROL REQUIRED. "In order for a planned economy to be workable, it must first be able to determine and control the added increment to the retail price of a given commodity by every arbitrarily increased labour cost through the entire process of production and distribution of that commodity, and then it must arrange for the distribution of wages in such a manner that these goods can be taken off the market at the determined prices. In other words, it must exert its control over prices, wages, output, and demand at every point of the process of production and ' distribution; for, otherwise, control exerted at one point will have unpredictable and upsetting effects at others. "Certainly by this time it should be realised that the Government's hurriedly conceived plans to accomplish both recovery and reform by the same stroke not only have been unsuccess- ! ful, but have led to such confusion and have so weakened the confidence of business men that they have largely defeated their own purposes and have prevented natural recuperative forces from asserting themselves.. TIME TO HALT. "It is also time for the people of the' nation to "call a halt to reckless Government spending and 'pump-priming,1 and seek a balanced Budget at the earliest possible moment. We have had two years of planned economy and wholesale Government spending, which have discouraged initiative in private business and have placed heavy burdens, present and future, on .the shoulders of the taxpayers. In proportion to the cost, the gains in business during the last few years have been exceedingly small. "The Supreme Court's • decision has removed some shackles from private trade; and if this change is regarded as a challenge to business to take the leadership in the move towards recovery, free from political domination, there is every reason to believe that business men are willing and able to assume that role. The passing of the N.R.A. helps to free business men from the fear of punitive measures, and thus promotes the confidence that is the foundation-stone of recovery. The attitude of the Government towards business should be one of constructive assistance, not one of restriction. Producers .must be free from the involuntry acceptance of the doctrine that the road to recovery lies in the arbitrary raising of costs, the restriction of output, and the destruction of commodities already in existence.

"It is axiomatic that only by increased production can more goods be made available and higher real wages be distributed to individuals."