DISTRESS SINCE THE WAR

Taranaki Daily News, 16 April 1932, Page 17 (Supplement)

DISTRESS SINCE THE WAR

WORLD’S ECONOMIC CRISIS SOME CAUSES AND EFFECTS. JW2E.A. LECTURER’S OPINIONS. Adopting the novel method of • illust ■irwtang a lecture with cartoons by the ■world’s noted artists, Mr. J. A.-. Brailsford spoke on “The Distress Since the War” at the Whiteley Hall on Wednesday evening under the auspices of the WE.A. Mr. J. H. Sheat presided. The cartoons used were largely those Of David Low, the New Zealander, who, Mr. Brailsford said, is in the first rank in Britain and probably the best caricaturist of the time. These showed how bitterly -the Lopes of “a land fit for heroes” had been disappointed after the war. Those who had been led to expect rich rewards were faced with the horror of unemployment. The hope of “making Germany pay” had proved “a great illusion,” and one striking cartoon showed Britain and France as mountaineers tied to a Germany who had •lipped over the precipice and was sure to drag them to ruin unless they could pull her back to safety. The effects of tariffs, trade restrictions and war debts were also strikingly illustrated. An American cartoon showed how popular opinion had expected salvation to come from lower prices—and yet falling prices were a 'major cause of the business ruin, unemployment and distress. The final cartoons showed vividly the human tragedy for those who asked “not charity, tut a job”—the right to give some worthy- service—and who were apparently unwanted in the world.

Mr. Brailsford appealed to his audience, in considering the tremendous problems of the time,. not io forget this tragedy of hopelessness, especially cruel to the .young, who had been preparing themselves with hope to fulfil some noble part. But the suffering would not have been in vain if it induced youth to face fundamental problems more courageously than the past generation had done.

Taking a long 'view, one might derive some satisfaction from the fact that mankind was being forced to conrider fundamentals. The ills arising from war-debts and reparations challenged us with the whole issue of international usury and parasitism, dependent in the long run on the exploiting of low-waged, poverty-stricken workers, of Asia and Africa. So, too, the great ■lump, so obviously associated with a fall in general prices, was compelling us to consider stabilisation, without which we should always have the alternation of boom and slump; and mankind was at last realising the folly of allowing some to suffer severe want while others complained of “over-pro-duction” and actually burned their produce.

The. fall in general prices throughout the world was the chief immediate cause of the present unprecedented depression, said the lecturer, and the most urgent immediate need was to bring about a general rise and then control money so that these disasters should not recur. However, it was necessary to go deeper into causes —to recognise that the distress was largely a reaction from the world’s worst war, and that social. wrongs were in large measure responsible for.the war, and that in these' lay the seeds, of even vaster catastrophes of war, revolution and world-wide distress. , CRY OF “OVER-PRODUCTION.” Ona- of these fundamental ills was called, quite absurdly, “over-production.” Henry Ford had said that there could not be over-production until every-Chin-ese had an automobile. A particular product might be in over-supply at a particular time, but to speak of general over-production as the cause of the woi’Td’s distress was simply to say we were poor because we had too much wealth. The paradox helped to remind us that we lived in a glorious age of expanding human powers, and that society’s pains were growing pains. The truth was that we had not learned to make sensible use of the great powers we had gained. Methods of production had so improved that in the United States factories each worker’s output had increased 45 per cent, on the average in 10 years —'1919 to 1029. In the same period the number of factory employees had been reduced from 9,000,000 to 8,100,000. The people thus thrown out of work, with their families, had very little purchasing power; the loss of their custom ruined other businesses, and so others were thrown out of work. Under any sensible arrangement the increase of wealth and leisure would have been distributed ■o that the community as a whole would have shared, but under the folly of the ‘ffieggar-your-neighbour” system, increase of output meant spoiled markets, ruined businesses, unemployment. Some people worked harder, far too hard, to try to save business or farm, ■nd others could not find a. job. It was obvious madness. . t As a cure for this the International Labour Conference at Geneva had recommended recently a general reduction of working hours to 40 pe.r week arid the general adoption of the. Washington Labour Convention, which would improve the rewards of workers in the poorer countries. If there was to be an increase of leisure for the workers, said the lecturer, would it not be more reasonable to begin with those who worked the longest hours at present —housewives and some farmers ? , IS MJONEY-LENDTNG- THE CURE? To some people the appropriate cure appeared to lie in more lending on the part of wealthy countries to the poorer ■nd less developed. This had been recommended by the MacMillan Commission of bankers and economists in the. report to the British Government last Tear. It had been the basis of pre-war international finance. Up to a point It worked, but if the money-lending were not accompanied by a better distribution of wealth and leisure it prorided. only a temporary alleviation and in the long run actually aggravated the problem. This should have been made clear to the world by Germany’s fate since the war.. Germany had- been reduced to almost complete destitution by the war ■nd the blockade, which was continued for several months after the war. ’Mr. Lloyd George had fulfilled. his boast that he would squeeze Germany “’till the pips squeaked.” Then from this squeezed orange he had promised to squeeze “reparations” to a huge amount. The only way to get reparations was to lend the Germans money to restore their industries.

But in spite of the loans the demans of the Allies had had to be readjusted again and again. From annual ‘payments of £1,500,000,000 demanded during the election of 1918 the figure ■had been gradually reduced to £125,000,000 (the normal under the Dawes ■Plan); further concessions . were made under the Young Plan in 1930, and now the Gernjan Chancellor was declaring

definitely that the payments must cease, and he had a good deal of support from other nations.

, What did all this mean? iSimply that dividends could not be drawn from a losing business. To advance more capital to pay dividends despite losses was 'only to land the 'business further in the bog. It was possible that if the demands on Germany had been postponed and liberal assistance given in the first years of reconstruction she could have paid large reparations. But she could only have paid by “dumping” goods on the world markets at prices undercutting ours. ’ And that was precisely what the receiving countries wished to prevent and were trying to prevent by high tariffs and other restrictions. TARIFFS ABSURDITY. Here we were landed in another absurdity—but again a hopeful absurdity. Creditor countries were demanding payment from debtor countries and were doing their best by means of tariffs to prevent them from paying, at the same time doing great damage to international trade in general. But all this was an, expression of the people’s desire to have work for everybody—a healthy revulsion again'st the danger of becoming parasites, as the Romans had done in their days of Empire. The Germans would better have been able to pay the huge reparations if their workers had been permanently reduced to a lower standard of living, but then, if they were allowed to compete with us for world markets, that would have meant lowering the standard of our workers also, or else losing our trade and living instead on the fruits of alien cheap labour. As a matter of fact the present unemployment in creditor countries, and along with it the idle luxury of the purely investing people, represented to a large extent this living on alien labour —in other words parasitism. (It was quite different from the unemployment in poor countries, due to lack of capital and confidence.) This parasitism had been growing before ever, the war came. British people had become more and more dependent on income from foreign investments — particularly in lands of cheap labour. Her investments abroad before the war had been reckoned at £4,000,000,000, and the income from these was about a quarteri of the total income of -the well-to-do classes. These investments not only helped the Asiatics and others to compete with British industry and so throw British workers on the scrapheap, but the assurance of income from abroad made the owners of capital in (Britain oblivious of the immense harm done 'by the decline of home industry. Lord Leverhulme in his address to the shareholders of Lever Brothers in 1920 had said that they could close all their ■huge works in Britain and the shareholders would still receive dividends from the wilds of Africa, the Pacific Islands and elsewhere. He seemed, to have little appreciation of what this parasitism meant to the future of the British people. The lecturer quoted from John A. Hobson’s book ‘‘lmperialism” about the danger to Western nations of losing their place in the world through the growth of a parasitism similar to that which had ruined the Roman Empire.

FALLING BRICES RUIN BUSINESS.

While Germany and the debtor nations were struggling to pay the creditors, the attempt was made impossible not only by tariffs but—notably in the case of Britain —by policies that tended to bring down prices towards pre-war level. This meant that a debtor country such as New Zealand had to pay twice as much butter and wool to meet the interest and principal due on loans from Britain. It also meant that as long as the fall in prices continued trade and industry, including farming, had to run at a loss or else go bankrupt. This "deflation” policy was justified on the ground that the war-time “inflation” by greatly raising the cost of living had robbed pre-war investors. The lecturer said these investors had certainly a claim to compensation, but giving it by the deflation process had meant world-wide ruin and unemployment.

Coming to the question of remedies, Mr. (Brailsford said that as the policy of bringing down prices had been the principal immediate cause of this unprecedented ruin, so the immediate step needed was to reverse the policy, but not to indulge in the equal folly of forcing prices .up without restriction. Both the MacMillan committee in Britain and the Copland committee in New Zealand had recommended a measure of restricted inflation or “reflation,” as some called it, but this was only a temporary measure. It was generally agreed that what was needed was a stabilisation, or steadying of the general pricelevel.

Of course the prices of individual commodities could not be kept steady, but money policy could control the general level. The question was whether the world must wait till all the great nations were willing to be brought under an international monetary control, as the MacMillan committee advised, or whether each should pursue stabilisation of its internal price-level. The case for the latter policy (which the lecturer himself considered sound) had. been most convincingly stated recently by Mr. Reginald McKenna, chairman of the Midland Bank and former Chancellor of the Exchequer of Britain. Mr. Brailsford quoted- Mr. McKenna’s views. The objection to such control of money values was that people feared politicians might use it as a means of extravagance and ruin the country’s credit. However, it had been shown that France prospered exceedingly despite the mopientary setback to her credit when she fixed the value of the franc at 2d instead of its pre-war value of Ifid. Surely, said the lecturer, credit would be far worse injured by the present policy of general smashing of contracts than by the quite legitimate processes of reflation and stabilisation.

If our political leaders could be fully trusted we could not only safely control the money of the country and keep its value steady in terms of goods, but we might make some use of the Douglas scheme of social credit, which had its attractive side but was still more open to abuse.

Checks on speculation would also serve to steady the life of the community, and in this connection the nation’s land policy was important. It was certainly disastrous for a farming country that people should try to gain wealth from speculating in farms rather than working them. One .came back to the fundamental trouble —that the world's increasing power of production was not distributed so as to keep the markets prosperous and the people employed. The habit of investing in countries of cheap labour when conditions at home became difficult- only aggravated the distress and ruin and brought grave danger of moral decay. An effort was required to bring about better standards of living throughout the world, as the League of Nations was trying to do. Progress was to be attained not merely by -State action and by the increase of public enterprise, but by the promotion of all forms of co-operation and by the development of the spirit of co-opera-tion, justice and humanity. One could look forward with hope, realising that all our trouble was that we had not yet learned to use the mighty powers we ■had discovered within our human crasm.