THE ROOSEVELT PLAN

New Zealand Herald, Volume LXXI, Issue 21758, 24 March 1934, Page 15

THE ROOSEVELT PLAN

Sir, —At the outset of this discussion I asked for a reasoned justification of the claim that a nation's purchasing power can be increased by raising wage rates. I doubt if many, will think that anything of the kind has been produced. It is easy to say that higher wages would give workers greater spending power, but where is the additional money to come from? If the £4 per week Mr. Reimers- would pay our unemployed were taken from others it would mean a transfer, not a creation, of purchasing power; if the amount required were created for the purpose prices would be/ inflated and purchasing power would be unaltered. In either case, no more goods could bti purchased, if paying money to unemployed men creates prosperity, why not pay it to all of us? Why not pay ten or a hundred -pounds per week, in place of four? Mr. Bloodworth admitted that a million spent by a multitude will buy no more than a million spent by a few, but says the goods may be different. Butf if mOre is spent on equipment and less on personal requirements, production and spending power will be greater. Mr. Bloodworth asserts that in the "early stages of the depression" improved equipment was tried in America and it "merely increased the disease." The facts show that no such experiment, on a nation-wide scale, was tried at any such time. In place of a great increase in output due to improved equipment American production fell rapidly from the commencement of the slump, till, at the end of 1931, it was 41.5 per cent below the level of the middle of 1929. At no point in either 1930 or 1931 did production approach the 1929 level. Can Mr. Bloodworth give the date of this great effort, which, he says, failed so completely? The world's purchasing power is that part of its output of useful goods and services that is available for exchange and not juggling with currencies or wage rates, hut either improved equipment or greater human effort is required to increase it. J. Johnstone.