PROFITEERING.

Oamaru Mail, Volume XLIV, Issue 14704, 3 June 1920, Page 1

PROFITEERING.

INFLATED CURRENCY -AND PRO- * FITEERS. (By Sir John Findlay, K.C., LL.D.) - .—Article No. 2. — " Before the war the international organisation and co-operation -of AustriaHungary, Germany, and Russia was most elaborate and widespread. The ' various currencies were- all piaintained on a stable basis in the- relation of gold and to one another. - This facilitated tlie easy flow of capital- and trade" to an enormous extent. It was this international organisation of that vast mechanism of transport, coal distribution, and foreign trade which made possible the industrial or-, der and standard of life secured in the dense urban' centres of tlie new popn-. lation. This stands out in clearer view now that the war and its results have reduced- that organisation and order to chads. Long ago Malthus taught that the : fertility of . the race would, in the absence of fundamental checks, outstrip the means of subsistence, but the progress of machinery, the sources of the • new world, the ever-improving organisation and • co-operation - among nations, have delayed'the arrival of the day he predicted. Half a century ago it was supposed, it would never come, but the war, with the havoc it has played with the means by which that day was delayed, reveals Malthus' law at the present time in Central Europe, at any rate, in a grim light.. . The terms of the Peace Treaty, if enforced, even in main part, will intensely increase the destruction of the economic of Central Europe, whose disintegration and starvation seem now almost inevitable- ='

This conclusioi! -becomes clearer when we remember that Europe consists of the densest population in the history of the world. Europe cannot feed- itself. Internally the. population is not evenly distributed —much of it is crowded into a, relatively small number of dense, industrial centres. This population secured for itself a livelihood before the war without much margin of surplus by means of a delicate : complicated organisation-, the foundations of "which have been destroyed. In these circumstances the decrease in the productivity of Central Europe is, and will be enormous. For instance, the coal production of Europe as a whole is estimated as having fallen off by 30 per cent-., and upon coal the greater part of the industries of Europe and the whole of her transport system depend. Whereas before the war Germany produced 85 per cent, of the total food consumed by her inhabitants, the productivity of the' soil owing to its exhaustion from lack of the usual applications of artificial manures throughout the course of the war, is now diminished by 40 per cent., and the effective- quality of her live stock by 55 per cent. Similar figures can be stated with respect to the plight of Russia alia Austria. According to Mr Hoover "a- rough estimate would indicate that the population of Europe is at least 100,000,000 greater than can be supported without imports, and must live, if at all, by the production and distribution of exports."

iS'ow in contemplating the chances of increased production of commodities, all the . facts above stated must be taken into consideration. The two main causes of high prices are:(1) Reduced production. (2) Inflated currency. In forecasting, therefore, the trend of prices, it is important to ascertain what the prospects are of increased production generally. The condition ol Europe, to-day, including the: great, relaxation of effort which Mr Hoover says is the reflex of physical exhaustion of large sections of the population from privation, and the mental and" physical strain 6f the vfar, does not encourage much hope of increased production; for some years to come, and then only if an elaborate international, industrial a.nd commercial organisation is estab-, Hshed, and that achievement in ' the present moorl of the recent belligerents is a distant, if even a probable prospect. But high prices have a second great cause; namely, the inflations: and - debauchery of the ■world's, currency that have taken place since the war began. The more abundant the currency of all kinds, including • bank credits, - the dearer are commodities, • unless the quantity of these commodities increase in due ijroportion. Lenin is reported to have declared that the best way to destroy the capitalist system was to debauch the currency. i

By a 'continuing process of inflation. Governments can confiscate seerCtlv and. unobserved an important- part of the wealth of their citizens. By this method they not only confiscate but they confiscate arbitrarily;, and- while the process impoverishes many it actually enriches some. The right of this . arbitrary, rearrangement of riches strikes not only at' security but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls beyond their deserts arid even beyond their expectations or desires become ."profiteers," who are the object ;of the hatred .of all classes of the community which the inflationism has impoverished. .-As the inflation, proceeds and'the real value of the currency .fluctuates wildly from month to month, all permanentrelations between debtors and creditors which form the ultimate foundation of capitalism become so utterly; disordered as -to .be almost iheaningless; and the process of wealth-getting degenerates- into; a gamble arid a lottery. There is no subtler, no surer means of overturning, the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of • destruction, and does it in a manner which not one man in a thousand is able to diagnose. '! " (To be continued.)