Evening Post. TUESDAY, NOVEMBER 16, 1937. THE PRESIDENT WARNS

Evening Post, Volume CXXIV, Issue 119, 16 November 1937, Page 8

Evening Post. TUESDAY, NOVEMBER 16, 1937. THE PRESIDENT WARNS

When the American Loom, after the manner of booms, was approaching the crash of 1929, no one dared to say so. There have been one or two American publicists or writers who, after the event, were put forward as prophets of the crash; but their claims are doubtful, and generally speaking it may be said that Americans walked over the precipice because they were afraid to think that there could be a precipice; The business religion in America up to 1929 was not to "think depression ;to do so would be depressing; it would be "bad psychology." Then—as sometimes here and now-—the fashion was to think that if you talked of trouble "just around the coiner," you would mcct —in fact, create—trouble just around the corner. So the Americans in 1929 said stoutly lhat there was no trouble round the corner, They walked boldly round the corner—and fan right into the trouble lhat was not — could not!—be there. The same thing may occur again in other countries, but not in the United States. The Americans now recognise hard facts. They realise that if the trouble they met just round the coiner in 1929 was merely "psychological" it was none the less solid. They, know that in 1929, when they were still religiously chanting prosperity, they gave the "prosperity psychologists" no possible cause for complaint against the dangers of "thinking depression." Yet the depression cattle. It will not come again in that manner. From the President downwards, America is using right-angled telescopes to see just what sort of thing, good or bad, is round that corner. Never has the thing round the corner been subjected to a closer inspection. And the result is a forewarning that may get rid of the shock of 1929 and the bankruptcy and despair of 1932-33. The President's report is neither soothing nor alarming. He states that the situation is not similar to that of 1929. But it "must not be disregarded." If private enterprise will not coun'er-altack the unemployment enemy, (he Government (reluctantly) must. lll> warns against the dangers uf social unrest. All this candour, so lacking in 1929, proves at any rate that tiiere will be no somnambulistic walking to the edge of a precipice that has no right to be there. Instead, there will be definite preparations for the counter-attack on an unemployment that is expected to increase. But here arises a very real problem in which every spending Government is vitally interested. Mr. Morgcnthau —who, like Dr. Schar'ht, believes that there are limits to financial heterodoxy—gave warning of the present argument when, a few days ago, he suggested the end of "pumppriming." That phrase was popular in Australia as well as in America in the pit of the depression, when the policy of Government spending was represented as the priming of a pump. The Government money was intended merely to restart tho industrial pump; private enterprise would then continue and accelerate the pumping, and Government spending would be "tapered off." From the outset, the real problem was whether any Government, once launched out on big-scale industrial expenditures, could ever withdraw therefrom. The problem of withdrawal cannot be said to have been solved in Australia. It certainly has not been solved in New Zealand. And in the United States the whole policy has come to a cross-roads. When Mr. Morgenthau, as Secretary of the Treasury, sounds the bugle-ctll to "taper off" Government expenditures, the President himself, politician as Well as financier, has to follow up with the further intimation that tapering off is conditional on private capital and private enterprise filling the breach. "If private capital will not take the burden of recovery from business recession, the Government will." This challenge to private capital means that private capitalists have to assume the task of hoisting sail against the stornl signals that no signaller dared give in 1929—the task of providing wages instead of Government relief pay, and of spending in such a manner that the thing round tfie corner will not assume the spectral shapes that astonished people in 1929 and utterly scared them in 1932-33, the year when Congress gave President Roosevelt his blank cheque. The private capitalists are now offered by the President the opportunity to prevent history repeating its performances in 1929-34. They are assured that the situation round the corner is not as in 1929, and that they can deal with it. They are challenged to spend in such a way that pump-priming may be tapered off. If not, the Government —Mr. Morgenthau's hopes notwith-standing—-will be forced to continue spending, and pump-priming will become- —what many people have long called it—a meaningless phrase. Not only the President's Message published today, but other special American messages cabled today or yesterday, illuminate 5 the United States internal and external problems as under a searchlight. There is not space to cover all aspects, but it may be pointed out that investigation shows the concurrence of shrinking business, high taxation, and lay-off of workers—a triple danger which, in its taxation aspect, is worse than in 1929; high prices of many farm products which penalise the workers, but whioh reward only those farmers who djfl not. lose their crops; unusually low points in the seasonal

declines, as the American winter advances. Notwithstanding the farm muddle, the President clings to crop control just as he clings to the New Deal, however much times are out of joint with it. He hopes the Supreme Court, now including Mr. Justice Black, will not kill the substitute A.A.A. as it killed the original. Capitalists have more than once said to Mr. Roosevelt: "Remove your taxes and we will act." But in his Message, as cabled, he promises no tax-reduction, merely "no new tax injustices." Will the capitalist, in these conditions, respond to the appeal? Or will the reported "deep psychological lag" continue to clog "the minds of business men"?

People make the greatest mistake if they think that in all these dry economics there is no element of drama. Far from the Nazi-Fascist countries, remote from threat of invasion, and spared war's horrors, the American people are yet finding in their internal affairs all the drama of history. They have "no enemies save themselves; yet their internal peace will not be easy. It may even have to be fought for. President Roosevelt is not a goose-stepping figure; yet his career is one of the great romances of history. Has it come to a crisis? Will there be any more blank cheques? The human drama in America is full of human interest, not less so because it so closely resembles our own.