MORE SPENDING POWER

Evening Post, Issue 13, 16 January 1936, Page 14

MORE SPENDING POWER

EETIYAL IN TBIDE

RETAILERS GRATIFIED

"Evening Post," January 16.

Reviewing the Christmas trade and its increased turnover, the trade organ of the New Zealand ■ Federation of Drapers, Clothiers, and Boot Retailers believes that "at long last the worst of the slump is well past, and we may look with confidence for a returning tide of prosperity, with, a progressive growth'of,better business until returns approximate to pre-depression days, unless some disastrous development in local or world affairs occurs to check recovery." '

Christmas shopping in almost every department is reported to' have'shown "a wonderful and inspiring revival of trade, and on all hands there was a welcome and gratifying atmosphere of hope, confidence, and good will, whic-i promises everything for the best in the immediate future, and an end to those feelings of fear and uncertainty whico were responsible to such a large extent for the falling-off in business whicn followed the unnecessary tightening o£ the purse strings and hoarding by those who could and should have been spending in a; normal manner."

THE BONUS TO UNEMPLOYED. The distribution by the Government of the substantial Christmas bonus to the unemployed is commended as setting a good example, the money passing into rapid circulation; in fact, statss the journal,. "It acted like a stone thrown into a stagnant pool, and me ripples of trade created grew and expanded in every direction. Much of it is still circulating, and will continue to- do so while those who receive- Jt spend in their turn. . . . - "The wonderful effect of the free spending at; Christmas confirms our considered opinion that the velocity witn which money circulates is a far more potent factor in the business life of the nation, arid in the exchange oc all goods and services, than, the quantity of money which is created or available. Every business man has realised that a quick turnover of goods at a small profit is far better trading than a slow turnover.at high profits. .. . . OUTSTANDING PROBLEMS.

Quotation from the federation's journal may be of general interest because it should repre.sent.the opinion of an important section of New Zealand business, that concerned with the clothing of the community.: As this section views the existing economic situation in the Dominion: "The''outstanding problem•■ which the new Government has to solve, in a manner which shall be both sound and lasting, is that of restoring the spending power of the people. Wool is again showing a welcome rise in price, and dairy produce is recovering rapidly from the .depressed prices which followed a false and forced inflation. "No doubt much of this added income is hypothecated by creditors claims on old liabilities). and business generally is not going to benefit if these enhanced returns are frozen again, instead of a fair proportion being free to go into general circula-tion-in providing goods which the producers by now must stand sorely in need of." ■■ . MORTGAGE FINANCE. The jouriial does not suggest that creditors' claims on producers' incomes should be denied, "but we do consider that with higher prices for our products our farmers should be allowed the spending of more of their returns than the extremely meagre budget allowed them in many instance in the past, and which garnished their attenuated incomes in- order ,to meet mortgage and other financial commitments. It is also held that should the guar-antee-price plan of the new Government become effective, it will only assist in the speeding-up recovery if the • spending power of the farming community is permitted a much-needed restoration, and the wiping-out of advances which have disappeared is spread over a long-term redemption period. With restoration of spending power to the country producers, the journal contends that the buying capacity of the town workers calls for equally urgent consideration. The Government's policy is to reduce unemployment to the greatest extent it possibly can, and to place every employable man in productive or- Useful service at standard wanes which will approximate to their former- normal earnings. "Such a policy, ■ carried out with vigour, and wisdom. -wilL not only remove 'a heavy drain oh the tax-paying members of the community, but circulate a further substantial sum weekly, which again will greatly augment production and exchange of goods and services."