CONFIDENCE

Nelson Evening Mail, Volume LXIV, 4 February 1930, Page 7

CONFIDENCE

The importance of confidence as a condition essential to business prosperity was discussed recently by the London "Financial News," with the object ot showing that it is not merely a transient mood, but primarily depends on the expectation of the business enterpriser that any enterprise which he may originate will result in a profit. Lack of confidence thus implies lack of enterprise, because it does not, in the judgment of the person concerned, hold out sufficient prospect of adequate reward. Hence the total volume of work to be done at any given time turns largely upon the plane decided by the enterpriser according to the measure of his confidence. Tho writer remarks that this conclusion is opposed to much of the economic argument used by certain sections of the Labour Party which rests upon the belief that the volume of inactivity and employment is determined by the quantity of purchasing power put into circulation. The fallacy of this theory is exposed by the contrast between the way in which financial resources are used in times of confidence in economic prospects and their use when confidence is lacking. In times of internal confidence financial resources are largely invested in works of internal capital development, often with a view to a distant return, which raise the level of the national income. When confidence is wanting, financial resources are much more generally used for what may be called money fending. The lending may be to the State for purposes of unproductive stock market booms; or to company promoters, who offer immense gains from participation in wild-cat schemes.' Tt is much more likely to mean large lending to foreign borrowers. The net result is the comparatively small volume of now; work set in motion within the country, i