THE ECONOMIC CRISIS

Otago Witness, Issue 4042, 1 September 1931, Page 23

THE ECONOMIC CRISIS

GENERAL SACRIFICE ESSENTIAL. PROFESSOR COPLAND’S VIEWS. WELLINGTON, August 25. An important statement regarding the economic problems of the Dominion was made to-day by Professor Copland in an interview prior to his departure for Australia by the Alaunganui. Professor Copland has spent three weeks in Wellington investigating the economic and financial position .of the Dominion, and his statement was made with due regard to the facts as he saw them. “ The fall in the export prices has been ot the order of 40 per cent.,” said Professor Copland. “ This has reduced the spending power of the rural producers and has caused a serious decline in the demand for locally produced goods and services, and the contraction of the output. The money value of the national income as a whole has been seriously contracted. This process is going on now at an increasing rate. The productive capacity has not been impaired. Indeed, as in Australia, the volume of export production has been increasing, but its maintenance depends upon an adjustment of all costs to income. To meet the fall in the national income and the general decline in prices an adjustment of public and private finance is required. The process of adjustment has not proceeded far. It must be accelerated if unemployment is to be cheeked and financial stability restored. There is no doubt about the ultimate capacity of the Dominion to solve its present difficulties, but the solution depends upon the readiness of every section to accept its full measure of responsibility in the common task. The economic depression is so widespread throughout the world, and the fall in prices, so serious, that a return to the financial and economic standards of the post-war era cannot be expected. New Zealand will not be immune from the troubles that have afflicted other primary producing countries. Her credit is high, and she should seek by every means in her power to preserve this cherished possession, but it can only be preserved by facing the full facts of her position.

“ lo_ adjust the public . and private finance to the falling national income as measured in money values is a problem that has confronted all countries at some tune in their history. The magnitude of the problem to-day is greater than at any time in the history of New Zealand, and the solution will require pooling her resources of leadership and knowledge. It is only by common agreement that adequate measures can be taken, and these measures must involve a general sacrifice and a review of the economic policy. WORK OF SPECIAL COMMITTEE AN EXPERT SECRETARIAT. r, i i- WELLINGTON, August 26. Public attention has been diverted from the proceedings of Parliament and focussed upon the meetings of the Special Economic (oznmittee which sits twice a day investigating the state of the national finances with a view to formulating a plan for the speedy adjustment of them upon a sound basis. The greater part of to-day, according to an official statement issued by the Prime Minister (Air G. W. Forbes) this evening, was occupied in taking evidence from the Comptroller of Customs (Mr G. Craig), the secretary of the Industries and Commerce Department (Mr G. W. Clinkard), and the superintendent of the State Advances Department on the-, finances of their respective departments. The committee has appointed a secretariat, among the duties of which will be to condense the evidence taken and present it to the committee in collated form, to indicate beforehand- to the parties giving evidence the lines along which evidcnee is desired, and also to collect information and data which will be helpful to the committee' in its deliberations. The members of the secretariat are Professor Belshaw, Dr R. M. Campbell, an officer of the public service who recently returned to New Zealand after three years’ study at the London School of Economics and at an American university, Air Malcolm Fraser, Government Statisticion and Commissioner of Unemployment, and Air B. C. Ashwin, a senior officer of the Treasury Department. Mr P. G. Pearce, inspector of the public service commissioner’s office, is secretary of the committee.. The Prime Minister regards the falling off in the Customs revenue as in no way indicating a progressive reduction, and said to-day that, though the first few months showed a heavy decline, there was no reason to believe that this would con tinue. The figures alone will test theaccuracy or otherwise of the Prime Minister’s forecast, for many observers believe that importers, whose stocks are now getting low, will not' replenish. Although, perfect harmony is reported to prevail in the committee conclaves, it is evident that the question of adjourning Parliament will have to be faced soon if the committee is to be given free scope to tackle its great task. HEARING OF EVIDENCE.

RECASTING THE BUDGET,

During the morning sitting, Air W. D. Hunt gave the views of the stock and

station agents, and, after the completion of his evidence, in the afternoon Air H. D. Acland and Air James Begg were examined upon the viewpont of the sheep owners.

■ The taking of evidence is expected by Air Forbes to occupy the whole of next week. Bankers will be heard early in the week. Their evidence will probably arouse a .great deal of interest among those members of the committee whose views on currency reform have been strongly expressed in the House at various times, and who will almost assuredly press the representatives of the banking interests for some key to the solution of the present monetary maladjustment. The problem of exchange, particularly as. it affects the New Zealand producer, will also be called beneath the searchlight, and the bankers will probably be asked to. ex plain certain aspects of the Dominion’s financial relationship with the Homeland.

Air Forbes said to-day that the question of recastiug the Budget had not been raised, but that the heads of departments had been called before the committee as they had been called before previous Government committees to justify their estimates. Members consider, however, that the heads of departments should lay all their cards on the table and allow the committee to justify or veto the Budget proposals. This point will unquestionably be revived later in the committee discussions. FARMING INTERESTS. FURTHER WAGES CUT SUGGESTED. WELLINGTON, August 28. The . seriousness with which the economic depression is regarded by the primary producers and those whose ■function it is to provide them with finance has been exhaustively dealt with by the witnesses who have given evidence before the special Economic Committee during the past two days. The representatives of the stock and station agencies and of the sheep owners are believed to have given a glooniv complexion to the producers’ outlook. 2 It is gathered that when asked for remedial suggestions the witnesses presented drastic proposals for further economies in State and private expenditure. Among other things, it is believed, they claimed that if the producing and financial interests are to regain their economic equilibrium a further 10 per cent, cut in wages as well as a similar reduction in old-age and soldiers’ pensions will be required. The added suggestion was advanced that the interest rates on mortgages must be further reduced, though it was - urged that current accounts should remain unaltered. Naturally enough, the proposal to reduce the social services, which was based upon the idea that pensioners are now receiving more real income than before the cost of living began to fall, did not please the Labour members of the committee who declare that pensioners should retain their , small allowances because the cost of living has not been reduced sufficiently to warrant a reduction. The idea of retaining the present rate of interest on current accounts, too. raised suspicion in the minds of' some of the Labour members, who claimed that the stock and station agents would not share the sacrifice on account of their operations on the’ share markets at present rates. It is clear that all the members of the committee have gained a greater appreciation of the problems which face the primary producer, and as there are further facts to be adduced it is expected that the witnesses will be recalled at a later date, particularly for cross-examination by members of the committee. The committee sat for a short while this morning and adjourned until 11 o’clock on Alonday morning when evidence will be taken from the banking interests. The leading witnesses will be Air W. A. Kiely, chairman of the Associated Banks, and Sir Henry Buekleton, general manager of the Bank of New Zealand. On account of the many basic differences of opinion between the various schools of thought represented on the committee it is thought that the Labour members will not force a rupture at this stage ; but it is almost assured that should any remedial measures be adopted along the lines that have been suggested a majority report will be required tojeonvey them to the House.

FINANCIAL NEWS COMMENT LONDON, August 28. Commenting on New Zealand’s economy committee, the financial news says: “Its appointment need not lead to the supposition that it is the climax to a spendthrift career. The problems are the normal ones of what is mainly a producing country, the income of which is liable to extreme fluctuations, and a large margin of safety is required. Experience emphasises the necessity of keeping expenditure substantially within a country’s capacity.”