The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. TUESDAY, MAY 31, 1932. SHIFTING THE BLAME

Southland Times, Issue 21716, 31 May 1932, Page 4

The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. TUESDAY, MAY 31, 1932. SHIFTING THE BLAME

Men who most earnestly blame the monetary system for the economic ills of the world should first consider the events leading up to the depression, because they will discover that the economic slump was the inevitable outcome of a period of inflation accentuated by decisions influenced by political, and not financial, factors. Gold, as a medium of international finance, is used to meet the trade balances which cannot be covered by goods, and it follows that if trade expands regularly, the demand for the movement of gold from one country to another will not increase very much, but if new conditions set up by political acts sunder the exports and imports and direct the balances requiring gold in one direction, the result must be a maldistribution of gold leading to the view that there is insuffic-

lent gokl. Maldistribution has resulted largely from the operation of the War Debt fundings and the Reparations, and if the conditions set up by these two things continue, every addition to the world’s currency will merely prolong the process of maldistribution, without curing it. No system of international finance could have stood up to the strain put on it by the post-war activities of the politicians. The gathering of the gold in the United States and France was not the result of a financial conspiracy, but was the outcome of public opinion in those two countries. In the United States the operation of the Hawley-Smooth high tariff was to shut out the goods of other countries, and it was the result of the demand of the American people for high protection. Public opinion in France kept the Reparations at fantastic levels and also raised the tariff. War Debt concessions have to fight public opinion in America, though the financial interests favour cancellation and lower duties. These facts should not be overlooked because they mean that the “unseen assassins” of whom Sir Norman Angell has spoken are at the root of the world’s troubles. These “unseen assassins”—public opinion—have been at work in all countries, piling up extravagant schemes and living in a recklessly high style on borrowed money, and now they are blaming everyone but themselves. Money lent to this country by British investors was expended on various works jn the Dominion and assisted to keep the people here on the standard of living they desired. To-day it is argued that these investors should not receive their interest —Langism—because they are not making an equal sacrifice; but is not the British investor paying a scale of taxation higher than that imposed in any of the world’s taxed communities? And are not Britain’s troubles intensified by the falling off in her returns from shipping and investments abroad, her invisible exports, which are used to purchase our goods? The diminution in those invisible exports is due to the falling off in trade, and that falling off in trade goes back to the maldistribution of gold resulting from War Debts and high tariffs which impose on the world’s financial organism a task greater than it can handle. It is a fact that countries do not save against a rainy day. Debt extinction funds, if they are used for sudden repayments upset the financial machinery, and so redemptions from year to year have been found to be more advantageous, but outside of these operations countries do not save large sums and keep them liquid to meet unexpected crises. Whose fault is it that the standard of living is extravagantly high? Surely it is the fault of the people who borrowed to live beyond their means, and that being so can there be any just reason for putting on the monetary system the blame which should be carried by the “unseen assassins”? Many of the political troubles of to-day have their rise in the desire of “unseen assassins” to put the blame elsewhere, and the grasping after new currency and credit theories, most of them involving inflation, is one of the fruits of this blundering. Having lived for a long time at a false height, people wish to go on doing this, and so they blame Neimeyerism or any other “ism,” which insists on the brutal truth that if a country has been living beyond its means it must shoulder its own blame and not fob off the responsibility by condemning monetary systems and financial plots. Governments today face tremendous difficulties because people wish to blame everyone else and will not face the stark facts that the frightful expenditure of the war and the demands of public opinion in the post-war settlements have brought to a head more quickly and more painfully the troubles which would have come along anyway. It is not the monetary system that is at fault; it is the anxiety of people to avoid the consequences of their own extravagance, and the disturbances due to war settlements and over-high tariff walls, that have brought about the present day evils and another debauch on inflation will not provide the cure.