Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, TUESDAY, DEC. 6, 1932. SPENDING AND SAVING

Poverty Bay Herald, Volume LIX, Issue 17955, 6 December 1932, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, TUESDAY, DEC. 6, 1932. SPENDING AND SAVING

Amongst the many theorists who arc airing their views at this time there ate not a few who advocate, as the remedy for the world’s ills, the, unloosening- of purse strings and the commencement of an era of judicious spending. Political irrespoitsiblcs would commence with Government expenditure. They are opposed, utterly and entirely, to prevalent ideas as to the necessity for economy and would keep the various functions of Government going at full blast: not only that but they would borrow money or inflate the currency in order to promote public works and put money into circulation. A simple remedy, they say, will often cure a serious illness and what more simple than the manufacture of currency by means of the printing press or the manipulation of exchange, or the raising of compulsory loans? Arguments such as this are not common to any one country, and so long as the immense problem of unemployment vexes the world there will probably continue to be disputation between those who, on the one hand, are convinced that an essential condition to the recovery of trade and industry is retrenchment in national and local government, and those, on the other, who favor spectacular schemes for conquering unemployment at a single blow. To removetwo million persons from the unemployment registers of Britain for one year, it lias been calculated, would cost £500,000,000, if credit lie taken for tho saving in relief and insurance benefits. The late Socialist. Government in the course of its career devised schemes estimated to cost £150,000,000 and, calculated that they hau by this means provided work for met--400,000 persons for oue year. It became obvious, however, that whilst tin high expenditure in road construction and other works mitigated unemployment only to a limited extent, public finance could not continue to stand the expenditure. Britain by this policy was brought to the brink of financial disaster. The dislocation that would be caused by raising £500,000,000 in England to-day, in addition to the amounts required for meeting the national debt, alarms every re sponsible person. Economists resist the whole principle of piling up current expenditure and future commitments on enterprises of doubtful value, based on a conjectural return of good times. The day of the luxury road, they declare, is over. “The idea of distributing largely increased sums to the unemployed in the hope of .increasing their purchasing power, and thus enabling them to ‘eat their way buck to a job,’ ’’ says the London Times, “is fallacious. If tho amount paid out in benefit or relief to 2,800.000 unemployed were raised to thirty shillings a week each (inclusive of dependents’ and children’s allowances) tho annual cost would be about £220, 000,000, of which only about £40,000,000 would be covered by the contributions of employers and unemployed —contributions which are in themselves a direct tax upon the costs of production. This would leave £IBO,000,000 to be contributed by the general taxpayer. Is this sum to be raised by increased taxation, when the Slate already takes one-third of the estimated national income, and when the Budget has only been balanced by maintaining an increase of £70,000,000 in taxation imposed last September? If so, the prospects of British industry, already admittedly harassed by over-taxation, will be black indeed. It is not of the slightest use,’’ the Times adds, “to sacrifice the employed to the unemployed, because the onlv result can be more unemployment.

Public authorities must economise because they have ove/i-pout in relation to the resources of the employed, front whom alone they cau obtain tho

money; and economy in public expenditure is one of the best ways of removing that lack of confidence which blocks the entry of private savings into fertile investment. Public economy will also increase the number of individuals who can obey the injunction to spend, because more will be left to individuals to spend. Expenditure in itself is essential to trade, but it must be expenditure related to resources and not expenditure which ,in its desire to alleviate the present irrevocably mortgages the future. The old maxim that money is best left to fructify in the pockets of tho taxpayer is still sound. It means that tho spending by individuals of what they have earned, .whether in the form of purchases or productive investment, is the best- way to increase productive demand. Such spending will be less in proportion as public extravagance leaves the individual fewer resources and less confidence; and therefore public economy, though only one part, is nevertheless a quite essential part of the solution of the problem of unemployment.” >So far as private spending is concerned there is a remarkable unanimity amongst the experts. Members of the economics stall's of a dozen English universities have summed up their views in a couple of sentences: “Private individuals and institutions can assist by spending according to their capacity. In cases of doubt, the patriotic, motive should weigh on the side of expenditure rather than economy.” An authoritative pronouncement on the problem has been made by six of tho most eminent economists, including Sir Arthur Salter, Sir Walter Layton, and Mr. J. M. Keynes. ‘ One thing is clear,” they declare. “The public interest in present conditions does not point towards private economy; to spend loss money than we should like to do is not patriotic. ’’Spend wisely ’’ rather than “save money,” says another writer, “should be the motto to-day. Surely it; is better to spend money in providing men and women with work rather than in ihe payment of taxes to keep them in idleness and on comparative poverty.” The Lord Mayor of Liverpool, who has tried to institute a campaign of wise spending, points out that if only those who could aflord to (lo so would spend more freely a great impetus would be given to trade. “There are probably half a million men in this country,” he says, “who could afford to buy a new suit tomorrow, or they could buy a new hat or a pair of shoes, and the list could be multiplied to cover n multitude of articles. What a miniature boom in trade would be created! A simple remedy like this might help the tide to turn.”