AT A STANDSTILL

Evening Star, Issue 22031, 17 May 1935, Page 14

AT A STANDSTILL

AMERICA'S RECOVERY PRESIDENT’S NEW DEAL EUROPEAN COUNTERPARTS Once more the United States has dropped into a period of discouragement after a few months of buoyant hope. Huey Long and Frank Kent, the Old Guard Republican and the New Republic, are equally certain that recovery is halted, that reform has collapsed, and that the Administration is tottering. Within the Administration itself there is a notable loss of self-confidence which is reflected in leadership that is hesitant and confused. Those who like to have their politics dished up to them in personal, partisan, and parochial form will no doubt continue to believe that the explanation can be found in Mr Roosevelt’s temperament, or in the results of this or that experiment, blunder, or folly. But an impartial view of the history of recovery, such as it is, and of the state of the depression throughout the capitalist world does not support, I believe, such a simple view, writes Walter Lipmann in the ‘ Daily Telegraph.’ FOREIGNERS’ DEBTS. It is a fact that the course of recovery since the low point of June, 1932. has been marked by a series of hopeful advances and discouraging relapses._ It is a fact that the present retreat is not confined to the United States, and is virtually world-wide. The history of earlier depressions shows that even when the Government was neutral and. let Nature take its course, the recovery proceeded through a similar series of ups and downs. This seems t 6 suggest that it is very easy to over-estimate the influence of current policies upon the course of recovery. This doubt is strengthened when one notes what is going on in the rest of the world. Thus, in England, according to the London ‘ Economist '; “ The first phase of recovery in this country, characterised by a vigorous expansion of the home market, came to an end in the spring of 1934.” There is political discontent, and it. has become popular in England to attack the National Government for not doing the things which it is popular in America to attack the New Deal for doing. . In France, which has not tinkered with its currency and has tried to balance its Budget, the year closed with a . real deficit of more than five and a-half billion francs. The German figures are hard to interpret, but it appears that the inflationary boom, due to expenditure for armaments and work relief, is halted and the Budget is out of balance. LOST WORLD TRADE. In fighting the depression Mussolini has gone into debt relatively about as much as Roosevelt, and in proportion to the Italian-national income far more heavily. Now here you have five nations, two run by old-fashioned Conservatives and Liberals, two run by new-fangled Fascists, and one, our own, run by New Dealers, And yet all five of them are having at best only moderate success in reducing unemployment and promoting recovery, . The British, off gold, but with a balanced Budget, have a hard core of unemployment, which, in proportion to their population, is probably as large as our own. The French are on gold and have an unbalanced Budget, and are faced with mounting unemployment. In America we are back on gold, have an unbalanced Budget, are spending considerable isums to make work, and .have a hard pore of unemployment which does not yield to the treatment. So it does not look as if the differing policies of Chamberlain, Flandin. Schacht, Mussolini, and Roosevelt could provide the explanation for the fact that in all five countries there is some, but not nearly enough, recovery. My guess is that all five countries are in difficulty for the same reason, which is that the worM economy to which they belong, in which they have prospered, for which their land, labour, and capital have been organised, is broken into fragments. BURDENS ALL BEAR. Each of these nations is trying to make a domestic recovery, and in some measure it is succeeding. There remains in each country a mass of ' workers, and resources of land and capital that belong to world trade. In one form or another every country is now subsidising the labour and the capital that cannot find employment in the world markets to which they are adapted. We are doing that through processing, taxes, doles, public works, and cheap Government, credit to banks, railroads, and ■ property owners. The British arc doing it by terrific taxation, which redistributes a large part of the national income and turns it from the savings of the well-to-do into the expenditure of the poor. The Italians and the Germans are doing it by direct taxation and the concealed taxation which is inflation. The French are doing it by reducing their standard of life. UNSTABLE CURRENCIES. The break-up of world trade leaves every country with a choice whethex it prefers the pains of taxes or the risks of inflation. In one way or the other, or a combination of the two, the national income has to support idle men and idle plants. When this support is lacking the domestic recovery lags and political discontent follows. For that reason we shall either drift along, now hopeful and now depressed, , with the depression stabilised, but not conquered, or we shall take in hand in deadly earnest the task of restoring world trade. When 1 say in deadly earnest I do not mean a few trade treaties with Brazil and Belgium, however well intentioned these efforts may be. I mean the stabilisation of the chief currencies of the world. For their instability is the basic cause of exorbitant tariffs, low prices, hoarding, and the utter paralysis of international credit, and until these currencies are stabilised there can be no adequate recovery. .