THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, JUNE 18, 1931. DEPRESSION IN AMERICA.

New Zealand Herald, Volume LXVIII, Issue 20902, 18 June 1931, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, JUNE 18, 1931. DEPRESSION IN AMERICA.

When the President of the United States declared that the main causes of the depression brooding over the nation came from abroad, and that "a large part of the forces which have swept our shores from abroad are the malign inheritances in Europe of the Great War," he was speaking to a frankly party gathering, and obviously as a party man. It is evident that Mr. Hoover still feels the need to counter suggestions made when he contested tho Presidency, that he had ceased to be an American and had become a cosmopolitan. It is a curious commentary on political methods that the work he did during and after the war, work which made his name honoured in all allied and many ex-enemy countries, has been used against him. For instance, in the Congressional elections last November a Socialist candidate, using the depression against the Republican cause, said to a'gathering of unemployed, "Pretend you are Belgians and Mr. Hoover will soon look after you." If, therefore, Mr. Hoover now seems to outdo the most fervent outbursts of the "100 per cent. Americans," it has to be remembered he is countering a fierce and often ungenerous attack made against him personally. He was elected President by a huge majority, amid acclamation of "Hoover prosperity." Now that depression has come, he cannot escape the accusations of responsibility for it. He is in a difficult position, with a Senate and House of Representatives largely hostile in composition to his party, if not personally to himself. If he wants a second term, he must win the Republican nomination next year, and then win the election; and the tide has flowed against his party. A shrewd judge of political currents, Mr. Calvin Coolidge, said that if prosperity returned before 1932, Mr. Hoover could easily secure nomination and would be elected. If not, ndbody else would want the Republican nomination, because a Democrat would be elected. Mr. Hoover is beginning early to fight the handicap of depression. To understand, and even in a measure sympathise with, Mr. Hoover's line of defence does not necessitate accepting his view of America suffering for the sins of others. He may win some measure of applause for his statement, but a?l his fellow-countrymen will not agree with him; nor will it be only divergent political creeds that will inspire their disagreement. Professor J. M. Clark, who holds the chair of economics at Columbia University, has been engaged during the past two years in investigating the effects of the war oh the United States. The work has been done for the Carnegie Endowment for International Peace, and should therefore not be coloured by political partisanship. In a brief summary of his conclusions Professor Clark has written :

One thing which stands out is that the greatest catastropho of modern 1 iraes touched the United States comparatively lightly. Despite our enormous economic effort we arc not impoverished and our economic life has not Deen revolutionised. Before the war wo were tho richest nation in the world, though in debt to Europe for billions of capital with which our industries had been built up. Now we are richer than ever, while Europe is poorer. Wo are a creditor nation on a vast and increasing scale, second only in that respect to Great Britain.

Having given that estimate of tbo war's direct effects, Professor Clark adds that its after-effects may have made the prosperity ruling from 1923 to 1920 greater than it would have been and the depressions of 1921 and 1930-31 greater than they would otherwise have been. The cautious economist is prepared to allow that some of the present difficulties may he the aftermath of the war in Europe, but he is not emphatic about it, as ho is in declaring that the greaj; upheaval enhanced the wealth of the United States enormously. However, Mr. Hoover is self-contradictory about his own main thesis. If, as ho says in the speech already quoted, tho United States is more nearly self-contained economically than any other great nation, how can ho then so sweepingly attribute the country's illfortune to happenings on the other sido of tho world 1 It is a flaw in his argument that party critics can be expected to fall on with avidity.

Other American commentators, dealing more directly with contemporary conditions than Professor Clark, do not support Mr. Hoover's contention that the main causes of tho depression lie outside the borders of the country. They place tho wild orgy of speculation which culminated in the Wall Street crash first, which Mr. Hoover refuses to do. Next they list production far in advance of the consumptive capacity of the country, stimulated by "high-power salesmanship" and instalment selling. In both instances tho break caused a powerful reaction, and the effect on production machinery, profitable only when running full time and at full power, was disastrous. After these things come "world conditions," another term for tho factors Mr. Hoover blames primarily. Yet authoritative voices declare that the export markets have failed the United States in this emergency largely because, following an exclusive and self-centred policy, the country which might have ■ done most to cure economic ills in Europe and elsewhere has aggravated them instead. Tho policy of aloofness from world affairs has delayed general recovery from post-war conditions, according to this school of thought, the record tariff barriers built up both hampered trade and destroyed goodwill. One leading American business man, citing almost all these arguments, concluded, with regard to European countries, "and when, finally, they had to find the means to pay us their annual instalments on account of war debt —may we wonder that their

purchasing power broke down?" To a certain extent this supports the theory of external causes aggravating the American depression, but it leaves tho responsibility definitely within the borders of the United States. Mr. Hoover makes no such admission, but that is explained by the circumstances quoted at the outset, that he spoke as a party man to a party gathering, preparing an early defence of his administration against charges of being to blame for the depression.