Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, FEB. 10, 1938. CLOAKING THE TRUTH

Poverty Bay Herald, Volume LXV, Issue 19555, 10 February 1938, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, FEB. 10, 1938. CLOAKING THE TRUTH

It is a matter for regret that an economist of such world-wide repute as Sir Josiah Stamp was unable to spend sufficient time in New Zealand to be able to comment more fully on conditions in the Dominion. Certainly the' country would have derived benefit from the advice of such an authority, but, as it was, he merely called at Auckland and declined any detailed comment on the position. He did, however, give expression, and some degree of emphasis, to one or two economic principles, and despite the modern tendency to ridicule the voice of authority it is as well that some heed should be given to his words. That he views recent legislation in New Zealand with some scepticism is revealed by his comment that the politicians no doubt have good reason for what they have done and are doing, "however strange they may look from outside." The only possible inference from this remark is that recent actions in this country do not conform to accepted standards and practices and could only be justified by the existence of conditions that do not apply elsewhere. Members of the present Government have insisted that they will isolate the Dominion from world influences, but they have not yet explained how this can be done, and unless they can achieve a miracle New Zealand must be just as susceptible to economic laws as any other country.

Sir Josiah Stamo's statement that "one can always cloak the truth on a rising market," enunciates a principle which must apply to this country as much as to any other, if not. in fact, to an even greater extent. There is no other country which is so vitally dependent upon its export trade, and it follows that if there is a decline in the value of exports—a trend which it Is impossible to control—the people of the Dominion must be adversely affected. This point is demonstrated by a simple set of figures. In 1929, New Zealand's exports were valued at £50,000,000, but by 1932 the y had

dropped to less than £35,000,000. In the same period the national income fell from approximately £140,000,000 to £90.000,000. By last year the returns from exports had risen to £OO,000,000 and the national income to the 1929 level. It is significant that the national income rises or falls in almost exact ratio to the export figures, thus proving conclusively that the prosperity of the country and its people is governed almost solely by its ability to market its produce overseas at remunerative prices. This truth cannot be too strongly stressed for it provides the only explanation of the present prosperity, and because at the moment there is a rising market it is possible that the true economic position of the Dominion is being cloaked. "It will be a falling market," added Sir Josiah Stamp, "that will test the situation." There is no reason to suppose that there will be another collapse equal to that of 1932—indeed everything suggests that the effects ol another slump will be greatly mitigated—but it is equally certain thai there is no guarantee that the presenl conditions will continue indefinitely If the returns from exports decline the national income must, of necessity decline with it and in like proportion but the legislation of the past two oi three years has all been based on the assumption that there is no limit tc the rising market and that New Zealand, alone of all countries, can isolate itself from the effects of a falling world market. Neither theory is tenable, yet it is upon these twin fallacies that New Zealand's present unstable economic structure has been erected. It is possible for a community to live extravagantly, to payhigh wages, and to work short hours when high prices are being received for its produce, but a reduction in prices must bring its inevitable reaction, and the more an attempt is made to stabilise living conditions on an artificial basis the greater will be the subsequent hardship when a readjustment has to be made. To enjoy prosperity to the full is legitimate, but to be misguided by the experience of one or two years and to take no heed of the future is to build a house upon sand.

Sir Josiah Stamp's remark that he relies upon the principle that no sound economic measure is ever really palatable might seem to be an extreme view, but he is on unchallengable ground when he says "human nature always expects more than the economic possibility." That is one of the weaknesses of human nature, and another is the belief in the illimitable powers of politics. Politics .can never exercise control over economic factors, hut economic factors will always control political activities. Politics can never bring prosperity; at the best they can distribute the rewards of it and at the worst they can mar, and even destroy, what should be the real benefits of it. In this country one Government has been blamed for the depression and another claims the credit for prosperity, but a very brief sludy of recent history shows just how impotent all Governments really are. The depression found Labour in office in England and Australia and Conservatives in Canada and New Zealand, but neither political doctrine served to prevent its ouslaught. Prosperity found Labour in office in Mew Zealand, Liberals in Canada, and Conservatives in Australia and England, and even Mr. Savage could hardly claim that a New Zealand Labour Government brought prosperity to the rest of the world. Let it once be realised, therefore, just how powerless politics and politicians really are and there will be less loose thinking on the part of the people and a closer study of the economic factors which actually dominate the situation in all countries.