THE OTAGO DAILY TIMES FRIDAY, JANURARY 14, 1916. NATIONAL ECONOMY.

Otago Daily Times, Issue 16591, 14 January 1916, Page 4

THE OTAGO DAILY TIMES FRIDAY, JANURARY 14, 1916. NATIONAL ECONOMY.

There is imperative need of economy, the Imperial Government has decided after a careful consideration of the financial position. In all probability there are many people who up to the very last day of the war, whenever that may be, will, if left entirely to the guidance of their own judgment, be content utterly to ignore the principles of economy and thrift. The improvident, like the poor, we shall have always with us. The community a3 a whole is fortunately not to be considered as composed of such persons. It cannot be concluded that the war has yet impressed upon either the people of the Old Country or those of the Empire at lpge the necessity for curtailing all unnecessary expenditure. If the lesson enunciated so often since the war began had been thoroughly assimilated in the United Kingdom there would have been no need for the admonition which the Government has now addressed to the nation. Nor would the need of a speech such as was delivered by Mr M'Kertna at the

great Trade Union Conference at Westminster last month, have been manifest. What the Chancellor of the Exchequer offered on that occasion was an eminently logical homily on the folly of asking for higlior wages at the present time and on the duty of saving where practicable. Especially to workers to whom the earning of higher wages during the war period had only meant an increased expenditure on other things than the necessaries of life was Ministerial advice tendered. Whether the expenditure is upon imported goods or upon articles manufactured at Home the effect, it is pointed out, is undesirable. In the former case there is thrown upon the State the difficult task of paying for the goods: in the latter there is an encouragement to the diversion of capital and labour to the supplying of what is unnecessary. Moreover, increased expenditure sends up prices, which must bear hardly upon the very large section of the wageearning class, not to mention clerical and professional classes, who lack any increase of income but bear the burden of increased taxation. In effect, increased expenditure at such a time as this on the part of those who have got the money, the Chancellor of the Exchequer has inexorably shown, means injury to their poorer neighbours. A large part of the evil of high prices from which the Old Country is suffering is due, the Chancellor affirmed, to the increased demand corresponding to increased expenditure. Therefore the man who is earning high wages through the war is particularly urged to save and in so doing to remove a large part of the case against the increase of wages, to cease encouraging the rise of prices and injuring the State, his poorer neighbours, and himself. After reminding the wage-earners that if 50 per cent, of their increased earnings had been invested in the war loan it might have been possible to consider further increases in wages Mr M'Kenna clinched the argument in these forcible terms: '' Bilt so long as these increases are only used for increased consumption you are in a vicious circle which can only end in the ruin of the State. If every increased wage means higher prices, which it must mean so long as increased wages are spent, then you go round and round in a circle—higher wages, then higher prices—you get no more for your money and the State is ruined. Those who demand higher wages must show themselves worthy of higher wages. They must show that they can save in the interests of the State and their neighbours, their families and themselves."

The' application of the appeal for economy is of the widest. It is not for the people of this dominion to dismiss the matter as one in which they are not concerned. What is said about the need for economy, both public and private, at Home is applicable to a greater or less extent in New Zealand where a great deal of money is unquestionably being expended frivolously and' without any due appreciation of the need for a husbanding of resources in view of the inevitable reaction after the. war. The economic position is largely obscured so far as the general public is concerned', it has been pointed out, by the special forms of activity due to the stimulus of war expenditure that is productive of a false prosperity which can only be of a temporary nature. To use a phrase employed by Mr Gladstone, an immense factitious stimulus is given to labour at the time, and subsequently, when the stimulus is withdrawn, an augmented quantity of labour is left to compete in a market where there is a greatly diminished quantity" of capital. Not in the Old Country alone is it desirable that the extra money placed at the /disposal of those classes which are feeling the stimulus should be utilised to the best advantage. And no resources of the Empire can be employed to the best advantage to-day that are not being devoted, as far as possible, to the achievement of tho one great end. As the Australasian Insurance and Banking Record observes: "It is now apparent to everyone that great calls on the patience and endurance of the nation have still to be faced, and in the department of finance it is essential to make all resources available, and to see that no funds are devoted to objects which do not contribute to the prosecution of the war, and which should therefore be deferred until a more settled period is reached." To the minds of the careless and improvident may be recalled the doctrine laid down some weeks ago in the House of Commons by Mr Montagu, that, inasmuch as the expenditure on the war would have to be borne by the nation almost entirely in the form either of tax or loan, it followed that, allowing for any loans that could be raised abroad, every citizen ought to be prepared to put a considerable proportion of his current income at the disposal of the State either in the form of tax or loan, and "the man who did not stint himself on articles which he could' do without, and did not set himself to tlfe standard which I the figures showed was necessary, [ who did not set himself to mould his life so that he would be in a position to afford half his income for the country, was not doing his duty in this war." Although what Mr Montagu suggested was obviously impracticable in the case of persons with small incomes, it is interesting to absorb such a pronouncement in conjunction with Mr M'Kenna's candid appeal for economy.