Evening Post TUESDAY, OCTOBER 1, 1940. TIME TO TAKE STOCK

Evening Post, Volume CXXX, Issue 80, 1 October 1940, Page 6

Evening Post TUESDAY, OCTOBER 1, 1940. TIME TO TAKE STOCK

The reassembling of Parliament today will afford the Legislature an opportunity to take stock of the present position. The bulk of the ordinary business of the session has been done, and part of the new legislation which is expected, the Excess Profits Bill, is directly related to the financial and economic conditions which call for review. As touching the war effort, there have been no great changes since Parliament adjourned. The preparations for home defence, including Territorial training, the ballot to increase the strength of the Territorial Forces, and the organisation of the Home Guard, are part of a scheme which the House of Representatives had the opportunity to discuss previously. In overseas defence also, so far as can be ascertained, work is being carried out according to a plan which has gradually taken form. i

It is in the financial and economic background of the war effort that there is the greatest need for reexamination of policy. There have been new developments since Parliament adjourned, and it is the effect of these upon the country's productive and staying power that calls for study. Wages in all award occupations have been increased by a general order of the Arbitration Court. The Government has followed this with a bonus to State employees in all branches of public service, but with the exclusion of those above a certain salary. This must mean a further weight on the Budget. Tax assessments have been received and, though payment will not be due before February, the amount of the levy is giving anxious hours to business men, and also to individual taxpayers above the lower scales. Close on the heels of the tax assessments has come the prospectus of the compulsory war loan. This demands a payment (less £50 for individuals and £70 for companies) equal to the tax paid last February. This will be payable in instalments within the next six months. Summed up, industry and trade generally have had a series of new imposts —higher wages, higher taxes, a compulsory loan, and the men concerned with the management of industry are wondering where it is going to end.

The cumulative effect of the demands must be to place industry under a growing strain. There is the financial pressure, a growing problem of man-power, and increasing difficulty in obtaining materials and supplies. Of course, strain is to be expected in wartime. Much of it is unavoidable if a wholehearted war effort is to be made, and the business community desires such an effort. But the stress is becoming greater than this necessity requires, in part because the Government has failed to reshape its pre-war financial and economic policy (which had already seriously undermined the national economic power) and in part because an attempt is being made to apply a doctrinaire system without full consideration of its practical effect. A pay-as-you-go plan is being applied to war costs, without sufficient reduction of civil expenditure to make that plan bearable. In fact, there is borrow and issue credit as you go for civil purposes. Apparently to satisfy those who have demanded conscription of wealth and loans without interest, a compulsory loan is being raised under conditions which will place many businesses in a position of great difficulty. There is a possibility ■ —in fact a probability—that an excess profits tax will add another weight to the burden. No one would cavil for a moment against taking all real excess war profits, but anyone giving thought to the subject ; can see how difficult it must be to frame a measure taking these profits ! without also seriously embarrassing producers and industries that have j been expanded under pressure to meet the war emergency.

These questions are raised now because they go to the root of our economic strength and stability. Pleas have been made by the Government for a stabilising of costs and prices, and a conference has been summoned to investigate this matter. But the Government, though making these pleas, has not been prepared to put all-round stabilising into effect. It has been even more reluctant to bring about such a reduction of civil spending as would

afford relief to the hard-pressed taxpayer. Unless more definite and purposeful action is taken, unless the Government shows vigour otherwise than in taxing, spending, borrowing, and issuing credit, unless it; makes a positive effort to conserve the nation's reserves, the economic strength of the country will be seriously impaired. Then the living and working standards which the Government is trying to preserve will be threatened also. These standards can be preserved only if the foundations upon which they stand are firm. If industry and commerce are overweighted and weakened all that they support will be injured too.