Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, WEDNESDAY, AUG. 30, 1933. THE NEW ERA

Poverty Bay Herald, Volume LX, Issue 18180, 30 August 1933, Page 6

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, WEDNESDAY, AUG. 30, 1933. THE NEW ERA

President Roosevelt has expressed himself as well satisfied with the results of his recovery drive, and cer. tainly there are many evidences beyond those of the usual ballyhoo associated with campaigns in America ito justify the belief that a business reaction has set in. Indeed l .there were indications of the turn of the tide even before the President issued his dramatic proposals, and whilst the measures taken have undoubtedly accelerated the pace of recovery it remains yet to be seen whether the impetus gained can be sustained. On this point there is a good deal of scepticism, even in America., though such is the intensity of fervour arous-j cd over the Blue Eagle campaign that] hot many people venture to throw cold water upon the President’s experiment. For experiment it certainly it. History records no more, astonishing revolution than this change of system in a country which has always proudly regarded itself as the home of unfettered individualism. What the ultimate effects of the new policy will be is hidden even from its authors. They are bending them- 1 selves for the present to the immediate task of recovery. There has been a decided improvement in business. Factories that have been idle have resumed work; others have increased their output. Wages have been increased and hours shortened. There has been immense' public works expenditure and huge loan ments have been made to farmers and to home builders. All this activityj should spell recovery, but there are one or two factors in business reconstruction that will obtrude themselves and must be taken into account in any estimate of the probable permanent success of the venture. The recovery so far is largely speculative. As Business Week, an American j publication puts it, there has been] "gambling on inventory" on a large scale. Manufacturers have taken ad-, vantage of the low prices at which they could purchase raw materials and merchants have purchased f reely manufactured goods to fill their ware-, houses in anticipation of better times j ahead. Prices have not been advanced by consumptive demand, which lags behind production. If the recovery is to be real and permanent, consumption and production must go j hand in hand. That is the aim of the ; President’s campaign for shorter, ( hours and higher wages—to spread ■the purchasing power over more people and into more households. Mr., Roosevelt’s purpose has been describ-, ed as "closing the gap between costs] and prices by increasing the conaump- ( tivo capacity of the people." The demon in his path, however, is .the j trait to which American people seem so susceptible, namely speculation, j Unless President Roosevelt can. effect a change in this respect, in human nature on the American Continent his plan will fail. The Canadian Promier, Mr. Bennett, put tho case very pungcntly the other day when ho declared: ‘‘lf President Roosevelt wants to save the world he will dose the New York Stock Exchange." The President, to his credit be it said, has realised the truth of this statement and has courageously taken firm measures to check grain speculation and to curb excessive profits in all classes of merchandise. He has threatened war on monopolies which abuse their monopoly, though his scheme provides for amalgamation of businesses and codification of prices—in short, rationalisation. In this very codification there is danger, for as the Baltimore Sun pertinently asks: "In getting rid of cut-throat competition are wo not also getting rid of initiative'

and enterprise? Are- we stereotyping

industry, so arranging hours, wages and prices that while we protect the well-meaning employers against the ruthless employer we also protect the employer gone fat and complacent against tho employer who lias w-hat country people call ‘got up and go’?” And how is the President to control speculation? Buying is mainly a psychological operation, and market prices are largely regulated by the estimates people form of their possible future requirements and of the general consumptive demand. Is the State going to think for the people and set. standard prices for commodities, or will allow it free play to the law of supply and demand? Concern has been expressed by Mr. Roosevelt, his lieutenant, General Johnson, and the American Federation of Labor lest consumption under the acceleration now given to manufacturing, gets too far in advance of purchasing power. ‘‘ I shudder to think," said General Johnson, "what would happen if we had a second collapse." The remedy in the Administration’s view is tho rapid inauguration of codes of fair competition for all important industries. These industries have been warned that if they fail, to bring themselves under the discipline indicated by the Government there will he no return to "gold-plated anarchy that masqueraded as rugged individualism." In other words, State-Socialism, the complete compulsory control of industry, in place of the moral suasion now being exercised. It is all extremely interesting, and one cannot but admire the loyalty with which the American, people have . got behind their President in an object lesson to the distressed nations of the world.