HITS THE WORKERS

Evening Post, Volume CXX, Issue 134, 3 December 1935, Page 9

HITS THE WORKERS

DEFLATION IN CREDIT,

LABOUR ATTITUDE

There can be no questioning the statement that, however matters might otherwise have gone as a consequence of under-consumption and displacent of labour due to mechanisation.

edit. deflation seriously accentuates

c problem of unemployment, writes O. Schreiber, president of the Trade Union Secretaries' Association in the Sydney "Su:_."

The arbitrary contraction of credit facilities can be said to have effected considerably greater damage than all other factors, principally because it is more precipitate in movement and difficult to remedy.

We are all unpleasantly familiar with the facts of dismissals, falling-off in demand, declining production, bankruptcies—summed up so well by Cassel, the Swedish economist, when he said: "Deflationism recognises no responsibility for the havoc it has created."

The workers, even more than in« dustrial and trading groups, - pay dearly for this fruitless and despairing policy. In great numbers; they lose their means of subsistence and those who remain in' full time or partial employment suffer drastic wage and salary reductions.

Credit deflation is the outcome of calculated manipulation. Sir Robert Home, who was in a better position to know than - most men in "high places," said: "The deflation from which we suffer today was deliberately adopted by our monetary authorities and has impoverished the country." •

It is a design to raise the earning power of money for those institutions and individuals who persistently and selfishly aim at depreciating the value of labour, and the industry of the people generally, for their own economic gain. i . As matters turned out, of course, some of the deflationists themselves were badly hit, because the process was much further prolonged than was anticipated and had cumulative reactions not foreseen at the outset. The effect of deflation on debtor countries has' been considerable. A writer in the "Nineteenth Century" for February, 1933, put the cost to Australia, Canada,: and the Argentine as equivalent to the indemnity imposed on Germany! , BANKING POLICY. The trades union movement, notwithstanding its numerical importance and its standing and influence in. public affairs, has not been given, representation on the Royal Commission appointed to inquire into the banking system; Finance arid' banking are no longep the special concern of business interests. . Policies which are conceived and implemented in regard thereto affect considerably, for good or ill, the well-being of the entire community. ■ The smooth running and expansion of industry, or its dislocation and contraction, result fr en policies determined by private banking institutions, and the experience of recent years has shown that such policies are imposed with' no regard to public welfare. Whilst the /functions of banking as such are essential in" any economy, credit policy, is so vitally, important to industry and the community that it should never be left to the control of private interests. Labour's view is that financial policy ought no more to be the prerogative of private control than, say, the defence of the Nation. Labour is also opposed to inflation, but.is in agreement with reflaiionary; proposals, provided these .be regulated and "gentle," in which event the effect will be beneficial. Under appropriate central bank action' price levels could be restored, to pre-de-pression levels and stabilisation of money values with advantage be adopted. - : However freely credit facilities. be made available, the pre-requisite con* dition is the market, and the latter is effective or otherwise only to the extent that the greater "proportion of the community is provided with adequate consumption-power in the form of higher wages and is kept in employment. : There is an imperative need during the process of reflation for commodity price regulation, to < ensure that consumers are protected from unwarranted price increases. "UNDERMINES CONDITIONS." Slablisation of price t levels will largely rectify the detrimental fluctuations in the purchasing power of money,'but this does not mean the rigidity of wage rates; increased rates of pay will then raise real wages and standards will improve.

Moreover, commodity prices .must be allowed to fall in consequence of reduction in costs made possible by still more intense utilisation of. machine processes and through mass production. .

It is not. difficult.to visualise enormously greater productivity at considerably less cost per unit concur* rently with a much higher standard of living and . appreciably greater leisure than at present/ . •

Summing up on the issues of credit deflation, we see that it is a policy singularly conducive to bad trade and unemployment—a specific undermining of the conditions of the. people.

Associated with under-consumption and displacement of labour due to mechanisation, the contributory factor of credit deflation,completes the cycle of the three causes underlying unemployment. . . .'.'"• .'.'' "

These causes, it is essential to;keep in mind, have their foundation in .the maldistribution of the national: income —a condition of affairs ethically wrong and economicaly unsound.

A befitting and progressive national policy in regard to finance and banking would require to depose the Influence and control of vested interests and make paramount the' welfare of the community generally.