NOTES AND COMMENTS.

New Zealand Herald, Volume LXVIII, Issue 21007, 19 October 1931, Page 6

NOTES AND COMMENTS.

DESTRUCTIVE TAXATION. "In every well-managed business ample provision for tho depreciation and replacement of assets is regarded as a first chargo upon earnings, and the same principle should apply in the case of nations," says Barclays Bank Monthly Review. " Immediately taxation becomes so heavy that it prevents tho accumulation of tho capital necessary to progressive industry, unemployment begins to increase. Tho resulting increase in unemployment causes an increase in expenditure and therefore a further increase in taxation. The increased taxation causes further unemployment, which in turn necessitates still higher taxation, and so the vicious circle is complete. When this stago is reached tho only cure is to reduce taxation." PARLIAMENT AND ELECTORATE. Reasons for an early appeal to the country were advanced by Mr. Winston Churchill in a speech in tho House of Commons during tho first sitting of the emergency session. Ho said that his first reaction, on reading abroad,of the formation of the new Government, was that it should stay in office for a good, long time. But then they found that it was not a National Government at all; through no fault of its own it could only rely on two out of the three parties in the House. From that moment a challenge was open to the fundamental interests of tho Slate and, in the famous phrase of Mr. Gladstone, such a challenge, once thrown down, must bo taken up and events must go forward to an issue. Everyone could see the dangers and disadvantages of a general election in the next few months, but the question was whether they would bo lessened by being put off. With every day that passed the short-lived memories of tho electorate would fade, and in six months' time it would not bo the Socialist Party that would bo in the dock, but the Government of the day, and those who had very largely brought these misfortunes upon tho country would once again be the airy and irresponsible critics of the Administration.

VANISHED WEALTH. -"The steady decline in recent years in the balance of payments, largely the outcome of tho decreased competitive power of our great industries, is chiefly responsible for tho weakness of sterling," tho city editor of the Times wrote a fortnight before its weakness was fully exposed. " This deterioration in Great Britain's economic position has been gravely accentuated by Government extravagance and unsound policy, which have burdened industry with heavier and heavier charges at a time when it was least able to bear them. Moreover, this extravagance has destroyed credit on an enormous scale. Labour propagandists frequently speak of credit as having a physical existence. If an individual or business loses £IOO,OOO they assume that some other individual or business must have gained £IOO,OOO. It doos not occur to them that heavy losses of credit can occur without anyone being tho gainer. The enormous depreciation in British security values in the last few years has been due to loss of income on the part of tho companies issuing the securities. But no one has gained by this depreciation. The companies themselves and the individuals owning their securities havo lost the power to raise credit and therefore to spend, and the working classes havo lost the employment that the credit would havo given had it not been destroyed." THE FLEXIBLE TARIFF. The Ilawley-Smoot Tariff Act of 1930, which raised tho general schedule of United States duties to unprecedented heights, greatly increased the authority of the Tariff Commission and empowered it to recommend for presidential proclamation a higher or lower duty an any articlo by as, much as 50 per cent, of the rate fixed by law, after an investigation into "-the differences in the costs of production of any domestic articlo and of any like or similar foreign article." The high hopes held out by this provision of tho bill have not been realised. There are 3220 dutiable items in the Tariff Act of 1930. Tho rates on 890 of these were raised by the Act, while 235 rates were reduced by it. In nine months, according to a statement issued by the commission on July 12, 22 investigations, in vol v- < ing 46 items, had been completed and reports submitted to tho President. Increased duties were ordered on 10 items, while decreases were ordered in duties on 12 items. In respect of 24 items no change was made. Investigations were still pending on 119 items. Thus, the Tariff Commission's labours up to July 12 had made virtually no appreciable effect upon the conditions created by tho passage of tho Act. Moreover, sinco tho passago of tho Act with its flexiblo provision, even tho advisability of investigation into various schedules has been called into question. Tho Farm Bureau has publicly asked for a period of 2J to 5 years as a trial period for the present tariff rates, especially in tho case of commodities which havo recently undergone tariff changes. Such a course of action, it is held, would appear to negative tho purpose and aim of tho flexible provision of tho tariff law which intends that mistakes and miscalculations should be rectified as they become apparent.