FACING UP TO WAR

Evening Star, Issue 23726, 6 November 1940, Page 3

FACING UP TO WAR

RIGHT POLICY-PAY AS WE GO USE OF PRESEHT AND PAST PRODUCTIONS NO TIME FOR LIP SERVICE War finance and the sane method of providing it -were topics discussed by Mr W. S. Mac Gibbon, of Christchurch, in his presidential address at the annual conference of the Associated Chambers of Commerce, which opened at Now Plymouth to-day. “ At the outset,” said Mr Mac Gibbon, “ I cannot help but say that, although this Dominion has been at war for more than a year, there arc people ■within it who do not realise, or are not prepared to recognise, that fact. Their' attitude seems to be that, because bombs are not falling on us hero, we are not fighting for our lives. Of course, I do not mean my remarks to embrace the fine men in our fighting forces, the bereaved wives and parents, and those others who are directly linked with the conflict; nor yet to refer to those employers and employees who are hard at work in our factories, workshops, and offices, forming what we might call our civil army. At the same time, there arc those—both employers anti employees—whose outlook, formed, in the days of peace, dies hard. It is not that they are disloyal, but simply that, from force of habit, maybe, they are short-sighted and pursue their individual interests rather than the national interest. Strikes, go-slow tactics, pin-pricking, and trouble-stirring in the sphere of labour all impede the effort of the nation, at the same time they point the lesson that the preservation of peace-time privileges and standards of living will be worth less than nothing if the war is lost. In the same way, any disinclination by employers and business concerns to face up to their full responsibilities to the country under war conditions, or to assist in the solution of acute problems, must be regarded as equally reprehensible. Unity and the best effort of every one until the war is war are the imperative-needs of the nation. FOOTING THE BILL. “ One matter that has struck me is that, while there is a good deal of lip service to the principle that New Zealand should, as far as possible, pay for the war as it goes, there is a marked reluctance by many to pay the bill when.it is presented on that principle. There is too much looking to the other fellow to shoulder the burden. On the part of some workers called on to pay war taxes there are protests and complaints, and a scouting around for means of currency manipulation to pay for the war without disturbing the comfort of- anybody, with complete disregard for the chaos and misery that are inseparable from inflation.

On the part of some business interests there is an idea that taxation should be so arranged as to preserve the steady profits of peace. In saying this, I do not mean that i necessarily agree with all'the taxation measures applied by the Government, or with their incidence—particularly when a good deal of the revenues is being devoted to a civil budget of record size, in addition to the need for financing war expenditures. As a result of the recommendations of the National Economic Conference, I hope that the Government will speedily reduce expenditure on non-war services. At the same time, the point I am trying to make is that a policy of paying for the war, as far as possible, as we go—and I think it is a right policy —is one which must fall heavily on ■II within the country. ■ . THE MONEY VEIL. “ It is, iu fact, the only real policy that is practicable. If we could drawaside for a moment the veil of money which obscures the reality of our business transactions, we would see that all our commercial and financial activities are based on the production and exchange of goods for consumption. War is a mighty consumer, both of goods and of men, and the goods are essential to maintain the men and to provide the materials for war. For these goods we may draw on any reserves we have, but the greatest part of them must come from current production. We cannot consume in war goods that have not yet been produced. In the real sense then, because the

needs of war must be met from present and past production, it is inevitable that we can pay as we go. It is this reality that matters most. The function of money and finance is to measure, direct, and to regulate production and exchange, and to conform with, but not to distort, this underlying reality. “ In peace time most of our man power and most of our material wealth is engaged in providing goods for exchange and consumption, and is devoted to tho maintenance of our standards of living and our own individual and general welfare. In war the national welfare and the national existence are at stake. To preserve them we take men from industry and trade and use them directly in war, where they become, in the ordinary sense, non-productive. But they are still consumers, and we must produce in order that they may consume. We must produce more in order to provide them with the materials for war, and after that must still produce more to maintain ourselves. That is why it becomes so necessary to make our organisation of production and exchange as effective as possible in war time. This is why our finances have to be revised, for finance must redirect and regulate this production to different ends.

“It should be the object of public finance, working ' through taxation, loans, and public expenditure, first, to stimulate the maximum of production of the most necessary goods and the maximum earnings of Income; second, to encourage thrift and saving; and, third, to transfer the purchasing power that can be saved from the surplus achieved through more production and less consumption to war purposes.

“ If the Government does this with its war finance it will reduce the purchasing power, and, therefore, the consumption of ordinary consumers. It will increase the expenditure on war, and in so doing will divert much of the national expenditure, and, therefore, of the national production from peace to war purposes, and. in so far as it does it effectively and economically, it can redirect the national effort and provide for both war and peace purposes the maximum of which the country is capable without resort to, or fear of, inflation. “ The necessities of war generally must bring hardship in their train, and it becomes a pretty problem for organised associations such as ours to determine how far to advance the interests of the business, industrial, financial, and professional people that we represent, at the same time dovetailing that advocacy in with national and Empire needs. I remember a point arising at a previous conference of the Chambers of Commerce as to whether the conference should strive to got for the business community what it wanted, or whether it should have regard for political considerations. Well, whatever opinions may be held on that score, the fact is that, with the country at war, we cannot escape having regard to political and national considerations which must divert business interests from the clearly defined course that otherwise would be followed.”-