The New Zealand Times. WEDNESDAY, JULY 27, 1921. GOVERNMENTS & TRADING

New Zealand Times, Volume XLVII, Issue 10963, 27 July 1921, Page 4

The New Zealand Times. WEDNESDAY, JULY 27, 1921. GOVERNMENTS & TRADING

A remarkable appeal to tbe British Government—to which we refer elsewhere to-day—raises a vast question. In that appeal the bankers of London demand two things. These are drastic economy an the Government’s Budget, and entire freedom of trade from. Government control, as well as absolute freedom from the free trade point of view. The first of these concerns this Dominion quite as much as it affects the people of Britain. The taxation demands are swelled not only by the aftermath of the w'ar; they have to meet an overgrown departmental ex. penditure. On the face of it that expenditure in Britain is capable of great reduction, as, indeed, has been admitted in Budget after Budget, in consequence not of Ministerial prevision, but of great popular pressure on a Government backed by a singular and very strong working majority. No similar admission has been made by our Government. On the contrary, the Government .has always taken the ground that the swollen public expenditure is due to causes beyond its control. This is the point of contention between our Government and many critics, who ' declare that extravagance can be seen at a glance in many departments of the Public Service. The question is: How much of the increased expenditure is due to abnormal causes, and how much to administrative incapacity? That question will have to he settled by the next Budget after very thorough examination. It is a thing for public opinion to insist upon, on the basis of the fact that the taxation demands are heavier than the producing interest* of this country can afford. It is possible that the extent of this evil is not so great here as it is in Britain. But, however that may be, both countries are now under the vital necessity of drastic economy in their Budgets. It is not a.question for bankers alone, radical as is the interest of the indispensable financial power they represent. It is a question for the whole community, which ought to put the strongest possible pressure on its Parliamentary representatives to probe the vital question of economy to the bottom.

Tho question raised by the London bankers of Government control of industry is not less important. It may even bo more vital. But their statement of it is scarcely fair. It ignores the leading fact, that the war made Government control necessary, and that without it the war would have been lost. The Government of Britain mobilised the trado and commerce of the nation, not because the members of the Cabinet had turned against the principles on which the hankers ground their appeal, but because they were compelled by sheer necessity. Viewed from, the war standpoint, their success was very striking. Tho immense results of their mobilisation were the wonder of the world and the moving example of the Governments of the Allies, especially the Government of the United States. Moreover, the success was not confined to war. The mobilisation of the nation’s resources was, .no Sir Loo Chiozza Money has pointed out, a revelation of the national capacity for doing things on a: great scale, a scale which must bridge

the road over the present gulf of the war aftermath, to greater prosperity than was ever enjoyed before the war.

At the same time, the new departure proved from the standpoint of peace that the appeal of the bankers is by no means groundless. The standpoint of peace is economic; that of war must disregard economy, for war gives no time for economic consideration., The one thing in war is to get the goods in time, whatever their cost, which is only one of the obstacles to be surmounted on the road to victory. In peace it is equally necessary to get the goods in time, but they must be got on payable conditions. The goods of war are for colossal waste ; the goods of peace are for permanence of' useful trade. The war mobilisation showed this aspect of the matter clearly enough. But it revealed also something of the radical difficulty of the peace side, by happenings not exclusively due to war conditions. For example, the general expectation of good economic results founded on the wholesale employment of business men in the direction of the national enterprise was falsified early. For many of the men quickly became infected with the spirit of bureaucracy, as was proved by the rivalry of various departments in the matter of expenditure allotted for their various activities, and in the growth, instead of the expected diminution, of the paralysing methods of the Circumlocution Office. In addition, it became notorious that the business system of checks and safeguards in such matters as contracting were not applied as they were expected to he, not because there were too many profiteers—as was freely alleged—but because there was no financial responsibility. The supreme need for quick work had much to do with the thing. But, all things considered, it is certain that the’ war cost considerably more than it ought to have cost, from the economic point of view, and that partly on account of the defects of bureaucracy. This fact was impressed on the public mind by the various discoveries in the great clean-up that followed the fever of: the war period. That impression was deepened by other failures; for example, the management of tlta railways and coal-mines, the great problem of the 8.A.W.R.A., and the handling of much of the produce of the Dominion.

On the whole, the case for the appeal of the bankers is very strong. Government control has shown what can be done by tackling great things. It hae also shown that tackling great things is not, in Britain, at all events, economically possible under Government control under the conditions ruling just now in Britain. Government control has a better showing here, as the two ineurance departments show, and possibly the railway management, which certainly ought never to pass out of the hands of the State. The point need not be pursued, for it is uot in practical politics yet. The other point raised, free trade, is not discussable here, for free trade is outside of all possible currents of political discussion. In this connection we heed only say that the bankers have supplied a conclusive answer to the argument that German reparation is wrong, because it compels the introduction of German goods into Britain. Their answer, practically, is that trade with Germany is essential. The hankers’ appeal protests “against every restrictive regulation of trade which tends to diminish the resources of the Stale.” Here we require a definition. “Dumping’’ -is contrary to sound economy. So are subsidies helping foreign competition in trade. So are foreign bounties. All these tend to diminish the resources of the State against which they are employed. The doctrinaires shrug their shoulders. What is wanted is a definition to stand between doctrinaire* and ruin.