MR SIVERTSEN’S DILEMMA

Otago Daily Times, Issue 21387, 15 July 1931, Page 10

MR SIVERTSEN’S DILEMMA

TO Till EDITOR. . , ' Sie—l am afraid Mr Sivertsen’s latest effusion does not assist us much, but still we may yet hope, for in that word, there is much, consolation. I have before me the May issue of the New Zealand Financial Times, which is not a Labour or Communistic publication, but, I believe, is the mouthpiece of “big business” in this. Dominion.- The fact that the: subscription to it is a guinea a year will alone mostly preclude the workers from reading it and becoming conversant with its contents. This is unfortunate, because I notice one of its writers mentions the fact that the civil servants will be lucky if they do not get. further “cuts.” As T said above, however, let us hope for tinbest. On page 21 of this paper is an article by .Professor J. B. Condliffe, entitled “ Economic Depression and Falling Prices.” He says:— As everyone knows, not only In New Zealand, but almost every other country, In recent months ■ has been experiencing the most severe financial depression of modern times. ’ One must go back at least to 1893 to-find a parallel for recent difficulties. The recentdepression, indeed, has’ in many respects been worse’ than that of 1893 in most countries, though not In New Zealand. In only, two great countries—-Prance and Soviet Russia —- have-the effects till recently been incon- , siderable. In the former the persistence of a comparatively simple, homogeneous and self-contained economic system, reinforced by a temporary political and economic hegemony in Europe, have deferred the consequences of the economic dislocation so obvious in the rest of the world. In 1931,’however, even Prance has begun to feel the pinch. There is difficulty in the public and private financial situation, the bank reserves are becoming, choked with gold, and there Is a considerable amount of unemployment. Soviet Russia has divorced itself completely from the capitalist world,-- discarded the- price;, system, and organised an ambitious scheme of planned production. It has, therefore, insulated Itself from cyclical depressions and falling prices, and cannot be said to have unemployment. Its troubles are of a different character, not relevant to this article. Professor Condliffe quotes Sir - Josiah ‘Stamp, one of our greatest living economists, as saying that the root ,of the. depression is “ in an impeded process of exchange.” Under the heading of ‘ The Gold Standard,” Professor-Condliffe says: It is sometimes argped that a good solid store of gold in a central hank reserve is an indispensable condition for the maintenance of public confidence. If this is indeed true, it indicates a pathetic blind faith in a tradition, almost a fetish. The solvency of a credit-system-rests wholly upon the wisdom of Its management, not now upon - any automatic mechanism of the gold standard. The sooner this fact is recognised the better. There is no theoretical reason why. prices must neoesr. sarlly fall. Neither Is there any need to revert to cumbrous policies such as bimetallism. All that is needed is .to accept, and carry to its logical conclusion, the already strong drift away, from the automatic gold standard to managed currency systems. It is surely not beyond the trained intelligence of our bankers to perfect their policies of management sufficiently far as to be able to free themselves from reliance on the crude controls of fixed traditional ratios of credit to gold reserves. A studied plan for - the development of a gi-eat system of dominion central banks, grouped round the Bank of England, strengthening and supporting each other, facilitating transferences of capital, promoting immigration, and, above, all; resisting the downward drag of prices by refusing to chain their credit policies,to a blind reliance on gold reserves. Those quotations are from one professor of economics. Now let me 3 U ®| T) 0 * 6 from another. Professor 3- D. H.- Cole,, of Oxford University. In’ the New World, under the heading, “Gold and the World Trade Crisis And it Is, above all, ridiculous that the 'bankers, who have made more disastrous mistakes since 1918 than any body of men except the politicians who drafted the Peace Treaties, should still be -given a free hand to manage our financial affairs just as they, choose. ... . Accordingly, it seems to me a vital matter that we should attempt to stop the general level of prices from failing further, and even try to raise it a little in order to give enterprise the encouragement which it so sorely needs, and I believe it Is well within the power of the World’s bankers to do this, if they will only act together with this object in view. . . . If we ■ (meaning England) would but give , a strong lead, I believe that world collaboration to 1 check the fall could- be secured.. Not from the bankers: for they persist : in saying that monetary causes have nothing to do with the slump. But-from almost everyone else for almost everyone except the bankers is in danger of ruin if the slump continues. Now- to sum up all these quotations, what have we to - consider ? First, the only country that is hot affected by the depression and has no unemployment is Russia. Yet Russia has a people to attend to and must live by the same process as other people. She gets all she needs from the land, and this, together with all the other essential mechanism, including banking, is under the ownership and direct control of the State. Any troubles die has, as Professor Condliffe says, are of another nature. Exactly, and can easily be remedied by her own-economic poliev. Then we have the others, all iu the same box (better off than Russia, in technique and supplies of commodities, etc.), but because of a planless production, distribution and exchange system of getting these commodities to the whole people because of a different economic system of operating—private ownership and production for profit, etc., and not for use—the peoplein this category arc suffering privations in the midst of plenty. Surely the remedy is plain for even the less observant to see.—l am, etc., July 18. P. Neilson.