MAD HATTER, ECONOMIST

Stratford Evening Post, Volume I, Issue 497, 20 July 1932, Page 6

MAD HATTER, ECONOMIST

“It’s this way,” said the Hatter, pouring himself a second cup of tea. “Our farmers produce much wheat, our factories too many manufactured articles, our machinists too many machines. We’re so efficient that we’re miserable. Surely you understand that” “I’m afraid I don’t.” said Alice. “For if there’s plenty of food and other things, everybody should be comfortable.” “Prices have dropped terribly),” continued the Hatter. “That’s what depresses us so.” “That’s no reasicn to, be depressed,” said Alice. “1 thought people complained when prices were high, ro if they’re low you should all be happy.” “No,” said the Hatter. “We produce so well with machinery that we have less and less need of labour. So the workman can’t earn wages and can’t buy goods, and the things the factories make can’t be sold.” (“Then what’s the good of making them?” wondered Alice.) “We are very thrifty,” the Hatter went on. “We save and pile up caphat with which we build more and more factories, which become micro and more efficient. The more efficient they get the more they produce and the fewer men they employ. So their products glut the markets and their machines create unemployment. We put so much capital into making goods that the consumer hasn’t enough money to buy the goods when they are made.” “Oh dear!” said Alice. “Doesn’t anybody know what to do about it?” 801 l Weevils and Tariffs

“There are economists,” said (he Hatter, “who have seen what was happening and warned us, But they are only scholars who lecture and write hooks. The practical men who run things have no use for the aca. demic mind. But they know the value of the boll weevil.” “What is it goiod for?” “It eats up the cotton crop and keeps prices from falling,” explained the Hatter. “Were it not for the boll weevil we should have magnifi. cent, crops, and then the South would be ruined.” “And do you keep a supply of boll weevils for such emergencies?” ask ed Alice. “They seem to have plenty in the South,” said the Hatter. “But what about the poor North which has too many factories; couldn’t your boll weevil eat up some factories too?” “No,” said the Hatter disdainfully. “Besides, we protect our factories with a tariff.” “Oh, I see!” exclaimed Alice. “Your tariff helps to sell the goods the factories make, doesn't it?” “Not at all,” returned the Hatter severely. “The tariff checks trade by closing markets. W|e close our markets against other countries; they close their markets against us. Each nation, you see, seeks a favourable balance of trade —that is, it tries to sell more than it buys. Each wants to buy less and less from (he others, and sell more and more to the others.” “But what one nation sells another must buy,” said Alice. She felt very sure of that. “Exactly,” admitted the Hatter. “Then how can they all buy less and sell more at the same time?” “They can’t,” said the Hatter, “They just destroy one another’s trade and add to one another’s suf. fering.” “But why don’t they help one an. other instead?” asked Alice. No Danger, But Al! Are Afraid “That,” said the Hatter, “is just what they don’t want to do. Each nation wants to do without the help of the others. Each wants to be self sufficing, because if there were a war sthe nation that could manage with the least imports would have an advantage.” “I hope there’s no danger of war,” said Alice. “We have many treaties to ensure peace—the League of Nations coven, ant, the Locarno treaties, the Kellogg Pact, arbitration treaties without inumber.” said the Hatter, i “Oh, good!” said Alice with relief. “Then nobody is afraid of war and nobody arms.” “On the contrary,” said the Hatter. “Everybody is afraid and everybody arms. We are more heavily armed than when the last war started.” “How very strange,” said Alice, though she did not want* to seem impolite. “No,” said the Hatter, “For nobody has confidence in the treaties Each knows that he will keep them, but he isn’t so sure about his neighbours.”

i “Then what’s the good ot mainng treaties?’’- asked Alice. 1 “Take another cup of tea,” said the Hatter. | Alice could not make it out. “Per* haps,” she thought, “if I ate another bite of the right side of the mush, room, whichever side it is, I might grow bigger and understand.” “Tell her the story of reparations,” said the Dormouse, waking up and rubbing its ears. “For that’s what has caused the most trouble.” “The Germans were obliged toi rebuild what had been destroyed in the war,” began the Hatter. “That was because they lost the war—” ‘*l suppose they sent workmen and materials and repaired the damage,’ interrupted Alice. “Don’t make foolish remarks,” said the flatter, “They were allowed to do no [tench thing. For that would have deprived French builders tof contracts ami French workmen o{ jobs ” “Then the Germans paid to have it done?” “That was impossible. They didn’t have enough money or gold, and it they had had enough they ciould not have handed it over without upsetting currencies. The only way they could pay was in goods. Rut tho creditors didn’t want German goods and put up tariffs against them.” “Then how didl ithey get paid?” asked Alice. “They lent Germany money with which to pay. Then she had so much capital that she made her factories more and more efficient and produced more goods and employed less labour —just like the rest of us Now, of course, she can’t pay.” “Why not, if she has so much capital?” asked Alice. Efficient, Miserable am! Bankrupt- “ That’s just the reason,” said the

AN ILLUMINATING DIALOGUE

(Harold Callender, in New York Times)

Halter. “She has borrowed so much that she’s broke. She has such line factories and such skilled workmen that she is helpless and her people are miserable.” “is Germany efficient, too?” asked Alice. “Very efficient indeed,” replied tho Hatter. “If reparations are bad ' d you abolish them?” asked ■ “That can’t be done.” said T ter, “because Franco won’t agree and became Allies must get reparations ■ Germany in order io pay their r ■ - o. America. These debts, too, must be paid in money from the sale of goods. But America has raised her tariff so as to limit the amount of goods she receives.” “Then how are the debts to be paid?” . “Nobody expects they will he paid , said the Hatter, “Yet we must act as though we thought they would be paid. One difficulty is that the debts change from year to year; so that the debtors must pay, not the amounts they borrowed, but much larger amounts.” “How can that, he?” asked Alice. “The debts are payable in gold, which varies in value. Actually the borrowers received, not. gold, but goods, the prices of which were then very high. And what they pay back is not "gold, but goods. But the prices of those goods have fallen, so in order to settle their gold debt the borrowers have to| pay hack about 50 per cent, more than they borrowed.”

“Is this a good thing for America?’’ ashod Alice. “No, indeed,” said the Hatter. “It prevents America from selling hef goods because (it prolongs the de. pression.” “Why were the debts allowed to change like that?” asked Alice. “Nobody thought about it until it happened —excepting a few theorists who didn’t count,” said the Hatter. “When the Dawes Plan for reparations was drawn up an academic gentleman put in a clause providing that when the value of gold varied more I han 10 per cent, the payments should be reconsidered. This was regarded as a harmless whim and the clause was left in. When the Young Plan replaced the Dawes plan this clause was not put in partly because the Young Plan payments covered the debt payments to America, which had no such safeguard.” Nobody Has Done Anything Alice sighed and wondered whether anything ever would happen in a reasonable way again. “Why do the French want reparations to go on?” she asked. ■“They say a contract is sacred and must be carried out,” replied the Hatter. “Are the American debt contracts sacred, too?” “To America, yes,” said the Hatter. “France also wants to prevent Germany from becoming strong again, for then she might insist upon revising the peace treaties.” “And what do Germans Bay to that?”

“They say they want very much to become strong again, and to re. vise the treaties and they ask France kindly to disarm and to become weak so they may do it.” “What do the British want?” “They want Germany to become strong so she can pay back what the London bankers lent her and so she can buy more British goods. But they don’t want to offend France, whici is strong already." “So nobody can do anything?” ask. ed Alice. “Well, nobody has done much,” answered the Hatter. “But isn’t it important to do some' thing?” urged Alice. “Of course. It is extremely important. Everybody knows that,” said the Hatter. Then Alice remembered what the Cheshire Cat had said.