THE PRESIDENTIAL ELECTION.

Otago Witness, Issue 3885, 28 August 1928, Page 67

THE PRESIDENTIAL ELECTION.

lII.—THE FACTS OF PROSPERITY.

By

J. B. CONDLIFFE,

Director of the Institute of Pacific Relations. Prosperity is a slogan that is likely to be much overworked in election speeches. The Democratic keynote devoted one of his purple patches to the; subject. His harsh voice came over the radio: “Four million workers unemployed—is this prosperity? ” —and so on for the string of rhetorical questions approved by political oratory. In another section of his speech he demanded that big business should “ take its hands off the throat of the farmer.” This lurid but somewhat ambiguous appeal was followed by a tumultous demonstration lasting several minutes. This is, with prohibition, the significant issue of the election. The Republicans claim emphatically that their administration has ushered in an era of unparalleled industrial prosperity, higher wages, lower prices, and tax reductions. They claim economy and efficiency of administration. For Mr Hoover especially they claim the credit of the standardisation and encouragement of trade which has been accomplished by the Department of Commerce. Al Smith, on the other hand, can point to a distinguished administrative record. He, too, has reduced taxes. The real difference between him and Mr Hoover is that, while the lattei’ works with and through the large corporations, the Govei nor of New York has on many occasions challenged and sometimes beaten them, especially in his creation of New York’s power system. It is conceded that the United States has been for several years enjoying unprecedented industrial development 3 and widespread, if not universal, prosperity. No economist, however, is likely to credit either set of politicians with contributing agi cat deal to this result. One suspects that any credit due should go to the Henry Fords rather than the Coolidges. There are of course a number of fortuitous causes—a great wealth of minerals, a very profitable war, more than ] 00,000,000 energetic, reasonably welleducated people, and, above all a philosophy which rates wealth high and is intolerant of other standards. In a country which is thoroughly democratic in the old Greek sense and Puritan at heart, possession of wealth is still the symbol of distinction.

There can be little doubt that many of the new American methods are revolutionary and on the whole beneficial. There is no need to labour the importance of machine methods and mass production or to dwell on their evils which have been much exaggerated. The standardisation of bolts, paving blocks, printing paper, and other such mechanical sities of modern life is all to the good. The very wealth which they help to create is building up the best market in the world for commodities of artistic distinction and individuality. The next generation, too, will see a ripening of the creative effort which is already foreshadowed in architecture, drama, poetrv, syid the arts generally. . The worst evils of mass production and standardisation flow from their social consequences and notably from the concentration of population in large cities.

Among the subsidiary causes of “ prosperity’’ must be listed prohibition which has diverted purchasing power to such commodities as cars and radio sets, and the system of instalment buying which has given elasticity to popular credit. Two lines of development are worthy of special mention. The first is the increasing use of expert skill. American manufacturers have learned the productive value of research laboratories, and are fast learning that the statistical economist, too, has something tp contribute to business. The old-time philosophical economist is still a neglected figure. He asks awkward and inconvenient Socratic questions and, like Socrates, tends to be unpopular and rather despised as impractical. The schools of business administration, on the other hand, are full of aspiring young statisticians who will perform useful service in bringing business methods more under scientific analysis and control. An outstanding example of such a service is to be seen in the elaborate statistical analysis upon which the Federal Reserve Board bases its control of the banking situation. From a great mass of recorded observations all over the country the statistician is able to give accurate information to the board which thereupon _nips a speculative boom or forestalls an impending depression by means of its control over the money market. Its mechanism is very simple, and so far has been drastically effective. In explaining it, the chief statistician was emphatic that, if similar information had existed in 1918, the post-war boom and depression could have been materially reduced, i.f not altogether averted.

Even more revolutionary is the development of various means of consultation and co-operation with labour. Trade unionism is, on the whole, weak, though there ar e notable exceptions, constructive like the Garment Workers' Union or destructive like the Chicago “ Racketeers.” Employers in the United States have, however, gone further than those of any other country in seeking ways in which to increase efficiency by utilising the suggestions and goodwill of their workers. The most notable examples are to be found in tlie very large corporations such as the American Telegrapffi and Telephone Company, the Baltimore and Ohio

Railroad, and the Union Pacific Railroad. These great concerns, having largely passed out of private ownership—the universities own large blocks of railway are in fact socialising themselves. There are many other experiments, also, where industrial enterprises are promoting stock ownership and management sharing by the workers while retaining freedom of managerial initiative in detail.

The-increased wealth that is being produced benefits both workers and consumers. Henry Ford puts the claim clearly when he describes his business as a machine, the purpose of which is to raise wages and lower prices. To accepr this view one has to believe that those who direct these great industrial machines will always place their consumers and workers first and regard their own private fortunes and power as secondary considerations. Where the ownership of the great utility companies is widely diffused and their direction is in the hands of professional managers, this belief is fairly well justified.

But it takes a greater power of faith to accept this change of heart as characteristic of all employers of labour. The Democratic Party takes issue with the Republicans at this point. Its leaders point to the pitiful condition of the mining fields and make much of the discontent of the farmers. They stress also the recent recurrence of unemployment on a great scale, estimated variously as involving from one to four million workers. At least they have drawn attention to the large gaps in the- “ prosperity ” upon which the Republican claim for a renewed lease of power largely rests. It is difficult to say how far the sedulously promoted i.gitation of the farmers rests upon a real economic basis. Their demonstrations have so far not been impressive. Instead of 100,000 farmers marching upon Kansas City, barely 300 arrived, and not all of them were farmers. There seems little prospect of a “ bolt ” from the Republican Party, though the discontent may swing some States over to the other side. Both parties have promised measures of relief which will probably turn out to be an evening up of the tariff. Since the economic crux of the whole situation, however, is the fact that the farmers’ produce prices- are fixed in world markets it is difficult to see how a tariff can be much help. The whole philosophy of the much-debated M'Nary-Uaughen Bill was the equalisation of farm prices by keeping domestic prices up. Both candidates have promised expert assistance, but on the -whole Al Smith’s close association with the sidewalks of New York renders him a less convincing figure to the farmer. It is difficult to resist the conclusion that the average American associates prosperity with enlightened business leadership and the Republicans with both. This fact inclines the balance to Hoover in the general estimation, though everyone seems to expect a close fight, and most people have a lingering fondness for Al Smith’s smile and his brown derby.