A DIAGNOSIS OF DISEASE

Taranaki Daily News, 9 December 1931, Page 3

A DIAGNOSIS OF DISEASE

TASK OF THE ECONOMIST RESPONSIBILITY OF THE PUBLIC. NEED FOR ADJUSTMENT OF COSTS ((From Our Own Correspondent.) Wellington, Dec. 7. Professor T. E. Gregory, who visited Australia and New Zealand as a mein ’ her of the Niemeyer Mission, has written an article for the Royal Bank of Canada, in which he declares that “the problem' confronting the world to-day is one of will and not of knowledge. It is possible to lay down the conditions on which, and upon, which alone, recovery is possible, but it does not lie within the ' competence of the economist to guarantee that there is enough will power, imagination and determination available to carry out the details of the solution, nor that the people of the world sup- ' port their Governments and central banks in the attempt to salvage the . world. The economist’s task is done/ when he has diagnosed the disease and indicated the remedies; the rest must . be left to the men of action.” Professor Gregory defines the present depression, for which he maintains that there is no ; parallel in the history of modern industrial civilisation, as a ‘Crisis of con-_ fidence” and a “price crisis.” Every sqotion of society, he declares, has a responsibility in a'crisis of this order of magnitude.

He goes on to say that “the public generally has the duty of not adding to the decline in the volume of business by abstaining from its normal volume of consumption, through exaggerated I fears of tho . future. To discharge, servants, to abstain from the purchase of useful goods which the individual really needs in the normal course of existence, in order to add to the funds available for the relief of distress, is to create as much distress as is relieved. If. every one, in order , to help things forward, ecyfiomises, that is, abstains from expenditure, the result must be to increase unemployment. The same remark applies to the withdrawal of currency from . banks, to unnecessary alarm about investments and the like. All such actions bring about the very evil they were intended to avoid; they add to the existing degree of disorganisation, further loss of confidence, and further weakening of the economic structure. Unfortunately these evils are rampant in the'Dominion. People are not spending what they could spend, and what they have • a right to spend. Currency is being 'withdrawn and hoarded and secreted in ; the belief that thereby safety is ot>- | tained, and also to defeat the tax- ' gatherer. The festive season is approaching when, by custom and tradition, increased personal expenditure is in order. It is to be hoped that those who can. spend, and that is the bulk of the population, will brighten the Christmas trade by a more generous expenditure. Professor Gregory maintains that a further responsibility attaches to employers and employed in relation to the problem of wages and employment. On This point he says that “a reduced income is an unpleasant experience. So is unemployment, but there can be no question that from the social point of view the second is much more undesirable. There can be no doubt that if the general level of prices does not much | recover from the depths to which it has (fallen, it will be impossible to maintain (both the level of money incomes and The level of employment. Society has , I a choice, in a period of falling prices, ■ between increasing unemployment and [decreasing money-income per capita. The discussion of how far wage and salary reductions are necessary should, therefore, be conducted in an atmosphere free from the allegations of bad faith and deliberate desire to destroy the workers’ standard of living, whiclj poisons such discussions to-day. But, to achieve this result it 'is necessary that there should be a much clearer realisation than generally exists of the relation between changes in the level of selling prices and changes in the level of costs. Unless prices can be raised again, one condition to recovery is adjustment of costs.” In ; the New Year the Government will be compelled to face the problem. ■