The Evening Star FRIDAY, MAY 19, 1939. LESSONS FROM AMERICA.

Evening Star, Issue 23270, 19 May 1939, Page 8

The Evening Star FRIDAY, MAY 19, 1939. LESSONS FROM AMERICA.

New Zealanders have in the past few years learned something about the policy of spending money as an aid to recovery. So has the United States, and there are a good many American people who do not favour the method. Mr Raymond Clapper is one of these. He is introduced by the editor of ‘ Current History ’ as one of the best of the Washington correspondents, and his articles are syndicated throughout the country. Perhaps the people of this Dominion may glean an idea or two from what he has to say. The New Deal, writes Mr Clapper, has not provided the answer to national economic problems. It was discovered in 1937 that, in spite of all the precautions taken to prevent that sort of thing, a depression .could occur under the New Deal. “Monetary controls, experience in regulating the volume of money and credit, the pumping in of Government funds to sustain mass purchasing power—these and many other safeguards which had been introduced during the first five years of the New Deal were counted upon to ensure the more abundant life.’’ The 1930 elections, which occurred while economic conditions were improving, revealed the country’s confidence in what President Roosevelt was doing. Certain classes were still complaining, but profits were high. The New Deal seemed to have made good. This phase continued, Mr Clapper proceeded, until without warning the bottom fell out of the (Roosevelt boom in September, 1937. “ Never before in our history has there been a decline so sudden and so precipitous. The New Deal had not found the answer after all. Unemployment had not been eliminated. Agricultural surpluses and prices were about as ominous as iu the dark days of Hoover, although governmental measures did spare the farmers the wave of foreclosures which always before had accompanied depressions. Washington had not mastered economic forces.” As a result of this discovery, it is asserted, there arose a general dissatisfaction with the idea of Government management —or, as New Zealanders would call it, Socialistic control. Americans have been* led to cling more tightly to freedom, to a minimum of Governmental interference, and to laissezfaire, which, with all its evils, is now preferred to regimentation. “ The public becomes suspicious of increased federal power.” On the other hand, there is no evidence of any special public demand for the repeal of legislation concerning social security, minimum wages, and maximum hours, or for the protection of investors in securities. What public opinion seems to demand is “ that Roosevelt should Jet tip for a while, should give the country time to digest reforms already instituted, and should in every possible way assist towards encouraging recovery.” And the President himself does not blame his policies for the collapse of 1937, as is shown by the fact that in 1938 be resumed spending as an aid to recovery. In January of this year he defended, as a permanent theory of government, the necessity of public spendings or investment. “He is firmly set in his emotional attitude, extremely stubborn, and as suspicious of business as business is of him. Give in to business on one point, and business will demand something else. Labour has never been satisfied in its demands on the Administration, and business is not likely to be. It is not to be expected that (Roosevelt at this late date will announce that lie has been wrong for six years, and that henceforth he will be a different man. Such things do not happen.” But business men reply that if they could fed confidence, industrial »

activity would leap forward. They seem disposed to have no confidence until Roosevelt,is out.”

The article winds up with a note of interrogation. No one is quite sure what is required to make the nation prosperous. A lavish expenditure of money by the Government has not accomplished it. Now private enterprise asks to be given its old freedofn once more, and seems convinced that that would solve all economic problems. But neither pump-priming nor laissez-faire can provide the solution. “ Maybe we New Dealers haven’t found the answers. The Republicans won’t know the answers either. When the country finds that out, then what will happen? That is the day we ought to dread.” There is far more in the successful running of a country than is comprehended in the philosophy of either Democrats or Republicans. Perhaps we may also add Labourites or Nationalists.