SOLVENCY OF THE COUNTRY

Timaru Herald, Volume CXXXVII, Issue 19624, 19 October 1933, Page 13

SOLVENCY OF THE COUNTRY

FINANCIAL FALLACIES ADDRESS BY MR G. S. CRAY "Financial Fallacies” was the title of an address given by Mr G. S. Cray in • the W.E.A. rooms on Tuesday The meeting was presided over by Mr R. Stewart, who introduced the speaker. Mr Cray said that anyone who was willing to investigate the income tax statistics without prejudiced opinions would find a full display of the “unearned incomes” and increased company profit, that had resulted from the war, and by serious and unjust oppression of industrial efforts, had brought to the verge of financial disaster the finest country, for its size, in the world. In spite of the distorted money values that were now represented in false but exalted measurements, he thought it safe to assert that 1914 marked the peak of this country's prosperity. In that year, less than 14,000 incomes, with allowed exemptions of £3OO subject to certain adjustments, were subject to taxation. In 1931, the exemption was reduced to £260, which “roped in” an increased number of small taxpayers. Unearned incomes for the 1927-1931 period were nearly double the 1914 total of all earned and unearned incomes. The profits derived by registered companies in 1914 were £5,486,301 and in 1931, £9,960,799. It had to be recognised that company profits must be a direct or indirect charge on the primary industries unless the service rendered by such companies was useful and productive, and equally, all other forms of “unearned income" from interest bearing investments were parasitical when they ceased ’o be reproductive and contributed to national welfare. Taxable Assessment. Mr Cray went on to say that he could not give the income tax figures for 1932 as they were not available 'n the same classified form as hitherto. It was, however, understood that the taxable assessment for 1932 showed a heavy decline from previous totals and it was fairly certain that this “slide” would be still further emphasised for the year ended 1933, and it was now manifest that the past basis of incomes for unproductive work and from interest-bearing investments could not be maintained unless supported by continuous expenditure of public money derived from loans amounting to something like ten millions a year—in a word, when borrowing ceased, the false basis of our national prosperity stood exposed. The speaker said that it was something of a paradox that with exalted incomes largely associated with unproductive efforts, amounting to more than three times the total of pre-war years, they were now face to face with national bankruptcy, the avoidance of which depended on an impoverished farming community drifting from year to year into further debt and difficulty. One consequence of this badly balanced division of the national income was marked by the dangerous wide-spread discontent of over seventy thousand registered unemployed men who were being maintained on a bare subsistence out of speoial wage levies and taxation—these men plead for the right to work in their usual occupations and were denied that privilege. Behind this unemployed army there was an equal number who were only partly employed and who were gradually but surely drifting into the same calamity as that which had overtaken those who were already workless. Conditions in 1914. Compare these truths with the conditions that prevailed in 1914 when the nation was approaching a solvent state—with wealth that was then measured in dwarfed figures compared with to-day’s measurements but unemployment was practically an unknown trouble, and when the farming community on whose welfare the prosperity of the country depended was making steady progress in reasonable comfort and under happy condi tions, said Mr Cray. To-day the national debts (mostly unproductive) were three times as much as they were in pre-war years and capital claims for monetary service were now so oppressive on industry that the continuance of those claims must mean disaster to debtors and creditors alike unless the burden of the debts could be regulated to the earning power rf primary and secondary industries. Since the war the population had increased by about 300,000 and with this additional maintenance the progress of the primary industries had "kept step" and in addition had provided an exportable surplus of ten millions a year above the pre-war basis, with every prospect of still further progress from year to year if reasonable encouragement was given to the efforts of those on whom the national prosperity was dependent. This encouragement demanded reduction of Government expenditure which was twelve millions a year before the war and was now twenty-eight millions—it also demanded recognition ef the fact that the fabricated capital created out of war wastage must be reduced either in quantity or interest charge if the solvency of the country was to be restored, instead of being stifled. On the motion of Mr J. Anstey, the speaker was accorded a hearty vote of thanks.