Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, MAY 17, 1934. THE NEW DEAL

Poverty Bay Herald, Volume LXI, Issue 18399, 17 May 1934, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, MAY 17, 1934. THE NEW DEAL

, Perhaps the most surprising thing about, the National Recovery Administration ol' the United'States is that it lias brought so few complaints. It gave the Government an absolute dominance over the banking, the business affairs and the industry of the nation, and thus constituted a social revolution on a large scale. “I tell you frankly,” said the President, in one of his addresses to Congress, “that it. is a new and untrodden path, but I tell you with equal frankness that an unprecedented condition calls for the trial of new means to rescue the nation.”' The United States had long believed theoretically in a policy of individualism, but in the grave litiancial emergency that arose the people accepted with complacency, and even with enthusiastic optimism, the extraordinary powers conferred upon the President. No previous President had held such a dictatorship and no President had ever received such unanimous support as came lo Mr. Roosevelt. in his role of saviour of his country. The National Recovery Administration and the Agricultural Adjustment Administration have worked with partial but by no means complete ,success. Under expectations of inflation stocks and commodities had a sharp speculative rise which could not be maintained. Codes were applied in many industries and the Blue Eagle campaign was supported for a time with patriotic forvor. Throe types of agreement were established in various industries, permanent codes, voluntary rc-omployment agreements, and modifications of such voluntary agreements. Evasions, however, became only too frequent and varied. In some directions much industrial trouble has been encountered, and tho means of assisting agricultural industries, by restriction and destruction

of output under Government guarantee, has proved to be quite uneconomical, though possibly necessary for a time. On the achievement side the Administration can claim increased employment, improved business, reopened banks, restoration of confidence. But it still has its problems, chief of which are to ensure that price increases do not outrun wage increases, the prevention of industrial or labor dictation against the public interest, and the elimination of what is called "chiselling," or the beating of the regulations by unscrupulous persons. It is on the matter of priceraising that the success or failure of the whole scheme hangs. "Despite all that is being said about the march of prosperity," writes the financial correspondent of a Canadian contemporary, "it is evident to many observers that underneath runs a current of deep, dark uncertainty. There are many business barometers that point to favorable economic weather, but, there are few competent observers who will say that (lie necessary fundamental changes have been made to assure lasting results. There is talk of prosperity, hut li> --e sight of it. N.R.A. has not increased the purchasing power of the country. Labor dnuculty is rampant. Billions are being thrown overboard in an effort to save the monetary system, hut nothing comes of it. The power to start; things lias evaporated from money." One of the chief causes of the depression was the pressure of mountains of debt, which increased in height with the fall of prices. The recovery measures have necessitated a vast increase in the public debt of the United .States, involving taxation to a. level never before experienced, and this increase in debt is having the effect of strengthening the hands of those who aro calling for higher and higher prices, with inflation of currency to enable the people to meet those-prices. The most disquioting possibility in the outlook, according to the Guaranty Trust. Company of New York, is not that the Government’s price-raising efforts will fail but that they will succeed too well. The time may not be far distant when the most serious problem of the Administration will not be to produce an advance in prices but to hold the advance in, bounds. It is in connection with relief activities that some of the gravest misgivings arise, for the cost of relief is tremendous, and is being met entirely by public borrowing. Even if it is possible to stop the borrowing at any determined peak the task of repaying will bo enormous. Hugo- refunding operations will be necessary, and the Government will be continuously dependent on conditions in the money market over a long period. There will exist a constant temptation to reduce, the burden by the temporarily easy method of cheapening the currency, and if this temptation is avoided i. debt will have to be paid by means of taxes that will inevitably place a heavy burden on industry.. Summing up, the Guaranty Trust Company’s survey states that thus far, the New Deal can hardly be said to have succeeded or failed. The crucial point will arrive when the Government ceases to pump huge quantities of public funds into the economic system, and business is left to sustain itself by means of its own internal stimulating influences. This crucial test will continue during the long period of public debt retirement. Heavy taxation and an enormous public debt do not offer an ideal background for an enduring and sound business recovery.