SPEND OR SAVE

Poverty Bay Herald, Volume LX, Issue 18255, 25 November 1933, Page 8

SPEND OR SAVE

(To the Editor of the Herald.) Sir, —One outstanding effect of the world depiession, so far at any rate as New Zealand is concerned, lias been psychological. Many citizens have buttoned up their pockets and spend as little as possiole; too many have put away the money thus saved into a savings bank or other institution on deposit. I The actual depression was caused by : the combination of several world factors which shook the confidence of those whose savings would have usually found their way into industrial investment. Figures prove beyond doubt that investment is lagging seriously behind the current rate of saving. This is especially so in New Zealand, where money on deposit is probably greater than it has e\cr been. Thus this “fear to spend” is really aggravating the trouble and postponing recovery. We are not, of course, ignorant of the fact that the depression has taken away, from thousands of people, the power to spend, but it has also caused panic end hoarding bv those who have lot leeii so hard hit, and added seriously to - the financial difficulties.

Present conditions of depressed trade naturally do not call for the normal expansion of industry, therefore normal savings do not find ready employment, but the fear of a fall in income has undoubtedly caused many people to put aside more than the normal amount. It is these extra savings which appear to have become dormant instead of functioning as they would under normal conditions as current expenditure, and consumption is diminished by that amount, and this reacts on trade'and intensifies unemployment. If those who have the means would replace this “fear to spend” by a little optimism and confidence, if they woilld resume their normal expenditure, it would help the tradesman and put new life into business.—Yours, etc., N.Z. WELFARE LEAGUE.