THE NEW DEAL.

Evening Star, Issue 21633, 31 January 1934, Page 6

THE NEW DEAL.

The chairman of the House of Commons Commercial Committee reached New Zealand this week. Sir John Sandeman Allen is touring £he worM, making a study of Empire trade conditions. He furnishes another link in the chain of opinion that Britain economically is definitely on the up grade, but America, he says, is an unknown quantity and has lost the world’s confidence. That appears to be a sweeping statement; 'but in the light of an article by Dr G. L. Wood, at present acting as professor of commerce at Melbourne University, it savours of under-statement rather than of exaggeration. Dr Wood charges the average Australian business man with “ abysmal ignorance ” as to the extent of the disaster which overtook the American social and economic structure in 1932. That disaster he describes as the inability of the vast resources of America to support a still vaster superstructure of debt. The trouble began in 1915 with colossal inflation and the pyramiding of debts at compound interest, involving fixed charges -which increased at a faster rate than earning capacity. President Roosevelt at once saw that his task was to prune out dead capital. There was plenty of it. Dr Wood states that at the level of prices which ruled in the United States in March last there was not a single financial institution, from banks to insurance companies, which, by the widest possible interpretation of solvency, could bo regarded as other than bankrupt. In many cases he was spared the trouble of using secateurs and saw, as a great number of financial institutions perforce shut their doors never to reopen them. The loss to depositors convinced them that Big Business had given them a very raw deal. The President, in a memorable passage concerniing “ moneychangers ” in his inaugural speech, indicated his agreement with the mass of public opinion.

The. Senate Committee on Banking and Currency began investigations into specific cases, and an American Senatorial Committee has been described as the most complete and merciless means of inquiry kpown in the political world. It worked in an atmosphere of great excitement, and was supported by public opinion more wholeheartedly than any investigating committee in Washington during the present generation. Dr Wood avers that the revelations of high finance as practised in New York “ have stirred the great bulk of the American electors to lynching point.” Washington determined that Wall Street should reform, and that safeguards should be set against any possibility of a repetition of the “ raw deal,” once the redistribution of national income has been effected and the rights to national wealth through property have been diminished. (It perhaps may interest our readers to know that Dr Wood’s article appears in the last issue of ’the Melbourne Stock Exchange Official Record.) According to Dr Wood, who apparently writes on first-hand authority, Mr Roosevelt knows his own mind, and is under no delusions as to whence the real opposition to his programme comes—from the corporations and individuals who have realised from the first what it really means and against whom it is primarily aimed. Hitherto it has been possible 1 to “ hold the nation to ransom ” and yet keep within the law. The reason was that in “ happier times ” counsel in the employ of great financial concerns had 'been allowed by the Legislature to write the tax laws to suit their own purposes. Hence it was that neither Mr J. P. Morgan nor any of his nineteen partners in the temple of finance—described as the New York centre of the colossal structure of foreign investment which collapsed in 1929—paid any income tax during 1931 and 1932, the two central years of the great depression which succeeded the last mad years of seeming prosperity. The House of Morgan, it may be mentioned, was the appointed agent of the British Government during the war, and carried through transactions of vast magnitude. When one thinks of the corporation lawyer and his clients in Wall street, one is the less surprised at the spread of racketeering downwards throughout the community, not excepting the literal and not figurative kidnapping of people and holding them to ransom.