The Sounthland Times. PUBLISHED EVERY MORNING. “Luceo Non Uro.” WEDNESDAY, JUNE 5, 1935. MR ROOSEVELT’S CRITICS

Southland Times, Issue 25303, 5 June 1935, Page 6

The Sounthland Times. PUBLISHED EVERY MORNING. “Luceo Non Uro.” WEDNESDAY, JUNE 5, 1935. MR ROOSEVELT’S CRITICS

Mr Roosevelt proposes to meet the adverse decision of the United States Supreme Court by an amendment to the Constitution while asking all those who are affected by the measures declared to be invalid to observe them in the meantime, although there are indications that already in many industries the less scrupulous principals have taken steps to take full advantage of their release from restrictions they consider irksome. These codes are of vital importance to the Roosevelt policy which seeks to increase profits in industry while it raises wages. There is an important school of economic thought which insists that to increase profits by the injection of new money into industry will sow the seeds of a further crisis, and that to increase the costs of production will obstruct true recovery. Mr Roosevelt has not dared to reduce wages openly as a step toward the reduction of production costs, but he has achieved this covertly by increasing the money level of wages while depreciating their real value by means of depreciating the currency and raising prices. In certain industries there has been a marked advance in the profits, but others cannot report any improvement, and the continued injection of new money is following the course the deflationist school anticipated: the amounts required are increasing instead of tapering off. While new money is being put out there will be indications .of improvement, but the critics of the Roosevelt scheme insist that as this new money must flow quickly into the hands of the consumers, tending to increase prices, it will impede the producing demand and a crisis, worse than the original one, will come the moment the flow of money is checked. The deflationists argue that only through a reduction in production costs can the profits of industry be legitimately increased, leading to an expansion which will bring about an enlargement of the opportunities for employment and therefore the amount paid in wages. Britain’s policy was largely deflationist, and it has also produced a marked increase in the returns from industry, followed by increased employment and evidence of a healthier economic condition. The decision of the United States Supreme Court has provoked a critical situation for the Administration, but the opponents of Mr Roosevelt’s policy, the basis of which appears to be the Irving Fisher theories, must regard it as a fortunate intervention if it leads to a recasting of an inflationist scheme which they condemn as dangerous. This school of economic thought see in the injection of new money intß industry the cause of financial crises, and .they insist that only through the application of savings, accumulated from profits, can the expansion of credit be effected without bringing in factors making for future financial troubles. Mr Roosevelt is still pouring out money, and while he is able to continue doing that there will be some appearance of prosperity, but the real test must come when this flow ceases. In other words, Mr Roosevelt’s criticfe say that while he is scattering money in subsidies, cheap loans and other grants, the

chickens do not need to come to roost, but as the President cannot keep this process going indefinitely the day of reckoning must dawn.