The Southland Times PUBLISHED EVERY MORNING “LUCEO NON URO” THURSDAY, OCTOBER 14, 1937. Taking Thought For The Future

Southland Times, Issue 23330, 14 October 1937, Page 4

The Southland Times PUBLISHED EVERY MORNING “LUCEO NON URO” THURSDAY, OCTOBER 14, 1937. Taking Thought For The Future

The prophet of gloom has never been popular. While the sun is still shining there is no fun in thinking of clouds that may be below the horizon; in the halcyon days of peace it is unpleasant to be reminded that bombs are bursting in less fortunate lands. And so there is always a Government outcry when members of the Opposition venture a note of warning. The prudent man who believes in giving a thought to the future is described as a croaker , and .the public attention is diverted as soon as possible to pleasant thoughts of spending. Or if, as happened in the House of Representatives on Tuesday night, the Government is confronted with an insistent reference to problems which will arise when the nation’s income falls in response to changes in the world’s markets, there is vague talk of remedies that apparently are still unhatched from the embryo theories of Socialism. The Minister of Education (the Hon. P. Fraser) was extremely voluble while stating what the Government would not do in a time of depression. It was easy to recite the political sins for which the previous Government has been blamed, and to assert roundly that they would not be repeated by Labour. But when Mr S. G. Holland asked for an account of what would be done the task appeared to be more difficult. “I am not sure that I am prepared to answer that immediately,” said Mr Fraser, but we certainly would utilize the entire resources of the country to protect the people from the impact of any international catastrophe.” There is no need to insist on the vagueness of this reply. Under the circumstances a certain amount of caution was to be expected, and it would scarcely be fair to criticize Mr Fraser for a display of prudence which has not been shared to any noticeable extent by his colleagues in the Cabinet. But the truth emerges that the Government is facing the future with a dangerous optimism and with a fine disregard for the basic virtues of thrift and temperateness. How far can this ■ optimism be justified by the present facts of trade and industry in the outside world? In a recent issue of The Economist the problem received a careful study. At the moment there can be no doubt that there is a continued improvement. The metal industries are thriving; textiles are in a sound position; and British exports have shown a remarkable increase, in spite of a general rise in prices. Motor-cars and radios are still finding good markets; and although interest rates are rising they are low enough to justify confidence. “There is certainly no tightness of credit,” said The Economist. “Nor, on the other hand, save for sporadic exceptions, is there any of the speculative excitement which characterizes the dying phase of an unstable boom.” So much for the good signs. There are also some danger signals which must not be ignored if we are to profit from the lessons of the last slump. The building boom still goes on; but the totals of plans approved in recent months are lower than they have been, and it seems probable that there will be less, building next year than in 1937. This does not mean the approach of a building slump; but it does mean an inevitable slackening in the industries which have contributed more than anything else to the new prosperity in Britain. The rise in prices and a continued nervousness in the stock markets were cited by The Economist as significant factors in the present position.

The Stock Exchange reached its peak in January, and industrial shares have since fallen by fully 10 per cent. What is more, the symptoms of a “bear” market have appeared: bad news has invariably put prices down, while good news has been unable to rally them to an equivalent extent. ... In view of all these facts there is a case for caution rather than for pessimism. The omens point to an active autumn, with further records in production and turnover in goods. Beyond that, it is impossible to dogmatize. But it begins to look more likely than it did six months ago that next year will see some recession.

This need not mean that a slump is imminent, or that if it comes it will be anything as severe as the one that is still painfully fresh in men’s memories. But the fact remains that informed opinion in Britain has adopted an attitude of “cautious confidence.” In New Zealand the case is different. We were told first that there are to be no more slumps. Now there is vague reference to a use of “the entire resources of the country” if the evil day comes. But Mr Fraser believes that “the policy of the present Government will lessen the effect of any international impact on this country.” The one

type of “international impact” which New Zealand is certain to receive when the present cycle ends will be a drop in prices for our primary products, and a corresponding drop in our total income. If the effect of any such “impact” is to be lessened there will have to be a radical change in a policy which has loaded the young industries of New Zealand with a burden of taxation and rising costs. The day of prosperity should be used to strengthen lhe economic • structure of a young country, and to prepare it for less fortunate times. That there will be a downward trend at some unpredictable time in the future no wise man will deny. “.... The outlook is unsettled,” said The Economist, “and it would be the course of wisdom to make preparation before the clouds darken.” But wisdom has always been unpopular, for it implies a recognition of truth and an attitude which responds to inexorable realities. The philosophy of spending is much more pleasant — while the money lasts.