Manawatu Daily Times Saving and Spending

Manawatu Times, Volume LVI, Issue 5614, 31 March 1931, Page 6

Manawatu Daily Times Saving and Spending

'We live in strange times. One by one our most cherished beliefs are being challenged, and the challenge often comes from an unexpected quarter. Now we have the last straw. A leading banker casts doubt on the soundness of the sacred British maxim that saving is a duty and a national asset. At the annual meeting of the Midland Bank, Mr. Reginald McKenna remarked

It has long been the custom to give an unqualified blessing to thrift, mainly on the grounds of personal discipline and the due recognition of responsibilities. Whatever blessings thrift may confer, however, on the individual, there are times when, judged by the interests of general economic welfare, it may bo carried to excess.

He went on to explain what he meant more precisely, but it is doubtful whether the explanation was as widely reported and read as what may be called the "primary statement. Further, it is doubtful, whether the explanation would be understood by the man-in-the-strcct.

It reads as follows: To realise the truth of this statement, it is only necessary to consider the two extreme suppositions in which, first, everyone saves all his income beyond the amount necessary to keep body and soul, together, and next, nothing is saved, but the whole of all money expended is devoted to consumption. In the first caso it is obvious that the greater part of industry would rapidly run down and cease operations for lack of customers for its output, while in the second, plant and machinery and public and private equipment would ultimately break down for want of proper maintenance and renewal. Somewhere between these two extremes lies the point of maximum advantage, which may be roughly defined as the amount of saving necessary to meet all demands for capital which can be profitably employed.

Of course, says Lord Riddell, one of the less aggressive of England’s "press Barons," there is nothing new in the idea that it is a good thing to "circulate money.” But hitherto this notion has been mostly promulgated by spendthrifts anxious to justify their extravagance. The criticism of saving has, however a modern history, rather interesting. The late Mr. Wheatley, one of the members for Glasgow, put forward the idea that we should disregard our export trade and revive and stimulate our industries by spending lavishly on commodities. He said, in short, "You buy an overcoat. That provides employment for numbers of your fellow-countrymen, who in their turn buy overcoats and other things. Briefly, you only have to. set the wheels of industry rolling and ipso facto, the country will flourish like a green bay-tree!"

He omitted to point out that you cannot make overcoats and other things without raw materials, and that we have to import most of our raw materials and pay for them by exports or by the income on our foreign investments. Since Mr. Wheatley’s death very little has been heard, of his economic ideas, although they have been germinating in the minds of certain more or less distinguished people. "I am not suggesting that Mr. J. M. Keynes is a disciple of Mr. Wheatley," continues Lord Riddell, "but he is reported to have said recently on the wireless that every time we save five shillings we put a workman out of work for a day. Coming from such a source, this is a very serious, and, as I think, unfortunate statement, particularly when read in conjunction with Mr. McKenna’s speech. It is obvious from Mr. McKenna’s explanation that the subject is one that cannot be expounded or dismissed in a few brief sentences. With all due respect, it is absurd to say that if I save five shillings I rob a man of a day’s work. Modern people do not hide their money in a napkin as they did in Biblical times.

"If I deposit five shillings with a bank, insurance company, building society, post-office savings bank, or some commercial institution, the cash does not lie dormant. It is used by the borrowers, directly or indirectly, in the employment of labour. Of course, Mr. Keynes’s object is to incite people to buy more furniture, clothes, neck-ties, motor-cars, food, etc. As. Mr. McKenna points out, industry would come to a standstill if these things were not purchased. But to come back to my five shillings. The chances are that if I save the amount this will lead to larger purchases of commodities than if I laid out the money myself. The subject is highly complicated. Before advising the British people to abandon the thrifty habits that have helped to make our country what it is, we want a. good deal more enlightenment. In particular we want definitions oi saving and spending."

The expression "on tick" is an abbreviated form of "upon the ticket.” It comes from the days before tradesmen kept books. A transaction in whioh cash was not paid was reckoned agon, a ticket

Ancient British earthworks at Castle Hill, Worksop, Nottinghamshire, England, are to bo preserved in perpetuity the hill having been presented to the town by the Duke of Newcastle, the {lord of the mason, *