Poverty Bay Herald. PUBLISHED EVERY EVENING GISBORNE, TUESDAY, MAY 3, 1938. CRISIS IN AMERICA

Poverty Bay Herald, Volume LXV, Issue 19622, 3 May 1938, Page 4

Poverty Bay Herald. PUBLISHED EVERY EVENING GISBORNE, TUESDAY, MAY 3, 1938. CRISIS IN AMERICA

When a member of the United States Cabinet says “Of course things are bad, and they are getting worse,” the rest of the world is compelled to take notice. As a rule, Ministers, almost by virtue of their office, are inclined to err on the side of optimism, and hitherto Mr. Morgenthau has not been any exception. His frank confession that he can see no sign of bottom being reached, therefore, must be taken as an indication that the Roosevelt New Deal programme has failed in its efforts to stem the march of business recession. Such an admission must have far-reaching political and economic reactions, so that the position in America to-day demands careful study, not only because of its possible effects on other countries, but also because of the political lessons which are contained in it. It might be argued that New Zealand is little affected by conditions in the United States, but such a view is a shortsighted one. The Dominion’s external trade, it is true, is closely bound up with that of Great Britain, but Britain, in turn, is much influenced by American developments and New Zealand cannot expect to be immune from the repercussions. Indeed, a crisis in a country of such importance as the United States must make its presence felt in every part of the world.

New Zealand has a special interest in the political side of American affairs for there is a close analogy between the policy now being followed in the Dominion and that which has proved a failure in America. Mr. Roosevelt and his advisers, • with the best of intentions, sought to promote recovery by the inflation of currency, by unprecedented expenditure on public works, by the regimentation of industry, and by the promotion of social reforms. All these things have been attempted in New Zealand, also. In both countries, the policy of the Government has been to usurp for the State those functions which previously were the prerogative of private enterprise. In justification of such an attitude, it was claimed that private enterprise had failed, which may be true, but experience has shown that the State is equally incapable of resisting economic forces, for, according to Mr. Morgenthau, conditions are not only bad, but are getting worse. This might not necessarily be an indictment of State control and interference, but it is significant that in those countries in which private enterprise has been given the freest play the measure of economic recovery has been the greatest.

There are some who assume that a conflict between capital and the State is inevitable, but even acceptance of this view does not justify the attempt by one to cripple the other. If capitalism is an anachronism in the modern world the proper thing to do is to exterminate it. Nothing could be more futile than to rest the foundations of a national economy on a system of capitalism and then attempt to undermine the foundations. Yet this is precisely what is being done in America and also in our own country. The New Deal in America has largely been an attack on "big business,” which, despite its admitted shortcomings, has been the means of making the United States the leading indus-

tria) nation in the world. If the very basis of the economic life of a nation is to be attacked by the State what hope can there be of further progress? The only alternative is for the State to take complete control. The only country in which this has been attempted is Russia, and there it has proved an abject failure, both politically and economically—politically because it has led to a ruthless dictatorship and the murder of countless leaders of the people, and economically because, to produce the goods essential to the barest existence, it has been found necessary to resort to the worst features of capitalism. The whole experience of history shows that private enterprise best serves the interests of the people,, and. this being so, it follows that an attack on private enterprise is an attack on the people. The position in America is summed up to some extent by the conflict between Mr. Ford and the President. Whatever might be said or thought of his methods, Mr. Ford has done more to promote industry and employment than any Government which has held office. To-day, his is listed among the “recalcitrant business groups” upon whom the administration has declared war. The result is that existing business is restricted and the incentive to further expansion removed. And Mr. Ford is only one leader of a vast number of American industrialists who find themselves in a similar position. Their businesses are being hamstrung by State interference, yet the State which interferes looks to those

same businesses to maintain the economic life of the community and can-

not itself provide any adequate substitute. In other words, the Government is killing the goose that lays the golden eggs, and even though it may be every bit as voracious as is sometimes alleged it is obviously absurd to kill it .until some other bird has been discovered which will produce eggs just as prolifically and at the same cost. It is little less ridiculous to halfstarve the goose out of sheer spite when doing, so means that there will be fewer of the eggs which are the the basis of the national subsistence. To-day some nations are killing the geese by slow strangulation and already there are signs of a shortage of eggs—commonly called a business recession.