Slumps and Booms Not Inevitable

Manawatu Times, Volume 63, Issue 49, 28 February 1938, Page 7

Slumps and Booms Not Inevitable

Preserving the National Income W hat the Labour Party Has Done Mr Savage Speaks at Featherston Per Press Association.

Per Press Association. \ ] TEATHERSTON, Last Night. ( An enthusiastic reception was accord- j ed the Prime Minister, Rt. Hon. M. J. Savage, by a large attendance at the s picnic on Tauherenikau racecourse on * Saturday organised by the Wairarapa ( branch of the Labour Party. During 1 the course of his speech Mr. Savage ! announced that the Government’s superannuation, scheme would be re- ( ferred to a Parliamentary committee for consideration; also that during the \ coming session of Parliament a Bill ' would bo presented for the development s of the i;:on industry in the Dominion. The latter, he added, would be one of ' the biggest things in the history of the ] country. The Prime Minister was introduced ' by Mr. C. Kenward, chairman of the [ Featherston Labour Representation ! Committee and Hon. D. Wilson, nation- r al secretary of the Labour Party pre- j sided. Mr. Savage contended that poverty ' has givc:i way in New Zealand to pick- ' nicking—“and in certain quarters to j garden parties.” A few years ago crowds gathered to demand more food and work, and they were given the ( charity that is as hard as a stone. “This year the greatest assemblages all over the Dominion have been for pleasure. Every form of holidaying has been a ' record. This is the difference between , having a Labour Government in power and a National Conservative Govern- 1 ment in a panic. When the Labour Party routed the ‘Repression Govern- : ment’ a i.ittle more than two years ago, ' the record of misery and muddle was a , disgrace to an intelligent community. Except for its lessons, the depression in . New Zealand is past history with no , value. But these should not be forgot- ! ten. Ono can fairly say that in those five blade years the people’s eyes were opened to the fallacies of the old ideas , of economics. The system of leaving , everything for private enterprise and | hoping for the best was proved false by the great economic disaster. The attrac- , tions of private enterprise may still please some, but they are not enough to satisfy th e requirements of the people. “It is necessary to emphasise that tact,” said Mr. Savage, “because there ■ are some men to-day who want to go back to the old system. They are the , men who wasted four years trying to turn the corner and then turned the wrong corner into the political wilder- ; ness. Let them remain there for the proverbial forty years. The prosperity , we know to-day must not be permitted , to lull people into believing that social • and economic reform was never neces- ] sary. Wei must build the new prosper- ; ity upon more stable foundations than ■ the old. The aim of Labour’s policy is to give the Dominion a steadily rising ] level of prosperity instead of a succes- ] sion of booms and slumps. And already j the new ways are proving to be better • methods i i redistributing the increased national wealth. “One oi the great truths the world • has learnt is that slumps and booms are i not inevitable natural forces, or ‘acts ] of God’—working out their inescapable , destiny. The history of the depression and of recovery the world over has j surely taught us that Governments ’ must accept the responsibility for deciding the main direction of national j economical development. We have had j the spectacle of poverty and suffering < in a world of technical efficiency. The j conviction that is now widely held is x Chat man can in actual practice inter- j fere successfully with the play of ecu* . nomic forces. Even Mr. Chamberlain, x the head of a Tory Government, says: 1 ‘We have had to realise that even the ( most efiieiont industry cannot create or maintain the conditions necessary for ] successful operation Governments must regulate the direction and volume , of trade.’ j “One of the bogeys which our oppo- 1 nents delight to conjure up is the pros- < pect of another depression. They £ threaten the people with depression j both from outside as a result of the so- \ called overseas recession as well as from i inside as the result of Labour’s prosper- i ity policy. Let there be no mistake or misunderstanding about it. Even if t there is any recession overseas, La ; hour’s policy is being framed to avert i the effects from being imposed on the c people of this country. s “We have always stated that it is i possible to insulate the New Zealand i economy from the effects of any world t depression. Should such an occurrence < again afflict the world—and I see no I reason why it should—then I can assure t you there will be no better test for 1 the success or failure of our policy, c Everyone knows that it is too late to i discuss remedies when a crisis is upon i us, and preparations must be laid iu j times of prosperity. We have our plans < ready—they are both comprehensive i and detailed. It is largely a money i problem. The Government is determin- < ed to base our money system on produc- ( tion. ] “The ‘Depression Government’ believed that the fall in overseas prices') led naturally to a fall in national in- ] come which in its course must neces- 1 sarily be followed by sacrifices all i round to meet the straitened conditions. 1 The Labour Party still holds that I national income must and can be sub- ' stantially maintained during bad times < overseas. \ye would protect standards of living by maintaining wage rates 1 and employment, by protecting the farmers’ infcoine, and there must certainly be no cutting of public works on ;

the score of economy, which was one of the cardinal errors of the past depression. Our standard of life can be limited only by our power to produce. “The clearest lesson of the depression is that monetary policy is the most important single factor influencing a country’s economic prosperity. Already we have used the public credit in restoring prosperity—and we will not hesitate to use it further whenever necessity arises.” After contrasting present-day conditions with those existing before Labour came into office, Mr. Savage said:— “Our programme of progress will go on. State liouses are now becoming available at the rate of 60 a week. Plans are in hand for the construction of 2517 houses in 41 towns. Moreover, building construction is increasing generally. Permits for December last were 323, the highest for ten years. The issue of permits for new houses last year totalled 4144, an increase of 1000 over the number in the previous year. The value of all buildings iu the larger towns last year was well over £7,000.000, an increase of 60 per cent. If the rate for the last few months is maintained, this year will show a figure of £10,000,00. And critics say private enterprise has been driven out of building construction. A great deal has also been said about expenditure on unemployment relief, and particularly the employment of 20,000 men on public works. World experience has shown that every penny spent in creating public assets and on retrieving men from enforced idleness goes into immediate circulation, thus helping to maintain business activity.’ * “As a result of the ruthless deflationary policy of the ‘Depression Government’ the Dominion amassed some £23,000,000 of sterling balances in London. They even reduced the national debt during the depth of the depression. These were claimed to be the magnificent achievements of wise administration. “But what was the result of that stupid policy in New Zealand?” Mr. Savage asked. “The consequences were inevitable. When Labour came into office over 57,000 men were without employment; not fewer tnan 175,000 men, women and children were suffering from protracted impoverishment; only 3300 boys were learning trades; social services were curtailed and hopelessly inadequate; 50 per cent, of 80,000 farmers were insolvent; wage cuts were so deep that the purchasing power of every class was affected; we had relief camps, sustenance on a starvation scale, and malnutrition, and people have not forgotten the soup kitchens and the old clothes drives. Such was a part of the economic mess we had to clean up. Those who had helped most to create these ruinous conditions now say that the causes were beyond political control. They also assert that if similar circumstances arose again they would, if they got the chance, do the same again. I will return to that aspect in a moment. I will say now that this can only mean that the Nationalists would again slash wages, cripple enterprise, abandon public works and reduce pensions and unemployment relief to a beggar’s pittance. They say we are spending too much money, which means, of course, that if they are returned again they will spend less. That must mean another depression in the making. That is not a fanciful prediction. It is a true summary of the Nationalists’ policy in practice. They call it prudent and safe administration against bad times. The mockery of those wretched conditions was that the great productive capacity of New Zealand was on the increase all the time, and so were our sterling balances. “Towards the end of 1935 Labour was given an opportunity to reverse the disastrous policy of its predecessors. The beneficial results have been increasingly apparent. By increasing the standards of living and creating national assets, prosperity has not only been restored but it has been increased to levels never before experienced in this country. Here are the official fasts of prosperity in the past two years, compared with those of the best year und<jr the ‘ Depression Government.’ Since 1935 our exports have increased .by 43 per cent., which means a gain of close on £20,000,000. That is the New Zealand selling side of the new prosperity. On the buying side the increase has been 54 per cent. The gain has exceeded £20.000,000. The business of the banks in two years tells a similar story of prosperity. Cheque t .nsactions have gone up by 30 per cent, or nearly by £5,000,000. The notes in circulation increased by 37 per cent., while wholesale business turnover has gone up 45 per cent. More than 1000 additional houses were built last year, as compared with 1935. The value of new buildings has increased by 60 per cent. And it has been said that the Government is throttling private enterprise. “How have the wage-earners fared in the change-over from depression to prosperity! Let them think over the vast difference in their lot. In 1935 wage-earners got £67,000.000. Last year the workers’ earnings totalled £96,000,000 —a gain of 43 per cent. In other words, those who work for wages received £29,000,000 more than they were paid under the last year of Coalition Government. As a matter of fact, wages in New Zealand to-day are higher than they were \in the boom year of 1929. It has been asserted that

wage increases would have increased naturally even without the Labour Government. But would wages have gone back to the 1931 level? We all know what has happened in other times of prosperity. Other sections of the community enjoyed increased returns, while the wage-earner remained in a relatively poor position. History supplies the proof. “When the wage-earners* position became unendurable in the past he always had to fight for an increase. He had to fight all the time, because employers do not willingly increase wages. He will have to fight again if the wagecutters ever get back into political power and re-enact their depression policy of stopping the machinery of compulsory arbitration. One has only to compare New Zealand conditions with those of -other countries where the machinery for industrial peace is out of gear or is not effective. In the United States of America the workers only kept their real -wages from falling by bitter strife in which guns and tear gas are used. A few weeks ago President Roosevelt issued a warning •against cutting wages. He emphasised the necessity of maintaining the purchasing power of the worker and added, “To reduce the purchasing power at such a time is nothing short of suicidal.’ “We have been saying that in New Zealand for years. “More people are employed to-day than at any time in New Zealand’s history; the employment of boys and girls has increased substantially during the past year,” Mr. Savage added. “Over 16,000 boys and girls left school last year to take up some definite occupation. Have you heard any parents rejjeat the old depression cry: ‘What arc we to do about our boys?’ A great deal has been said against the Labour Government’s policy of paying adequate sustenance rates. No excuse is necessary. We refuse to believe that hunger is the best promoter of employment. The aggregate private income has increased 36 per cent, in two years. This means a gain of £37,000,000. You have been told by Nationalist propagandists on the platform and in the anti-Labour Press that the Government’s legislation has shackled private enterprise and robbed them ot profits. Actual facts confound these prophets of disaster. Within 18 month sof Labour rule some 1350 new companies were registered with a capital of over £13,000,000. The profits of 150 representative companies, whose results have been published, show an average increase of over 14 per cent, after the payment of taxation. The number of registered factories last year increased by 692, bringing the total to well above 17,000. There has been a record increase of 21 per cent, in the number of factory workers during the past two years. Increases have j been recorded in respect of every kind of factory. The value of production lias gone up from £79,000,000 ,io £105,000,000 in round figures. Increased purchasing power for the majority of the people has had a marked influence on the extent of shopping business. Last year alnidst one thousand more shops were opened, giving employment to an additional 7000 assistants throughout the Dominion. ‘ ‘ The economic system has been reorganised in respect of agriculture. The dairy farmer has been given a guaranteed income for the first time in his life. He has been given security and stability. For ten years before the advent of the Labour Government the dairy farmer doubled his production but got no more reward for his efforts. He was driven into bankruptcy. Two years ago the average income of small farmers with valuations under £3OOO was £2 a week. To-day £5 15s is average after paying rent, interest and working expenses. Orderly ufarketing has been established in respect of many farm products. Thus the dairy farmer is protected against the vagaries of overseas markets. The procedure is now simple and economical.”