FINANCIAL STRINGENCY.

Thames Star, Volume LVII, Issue 14726, 3 August 1921, Page 3

FINANCIAL STRINGENCY.

THE POSITION REVIEWED.

CAN WE IMPROVE IT?

(No. 3.)

(Contributed by the N.Z. Welfare League.

Though the main causes of the financial depression are beyond our control, in so far as we are adversely .affected by conditions obtaining abrodd, we can undoubtedly. modify the position locally. We have in previous articles attempted to outline the general causes which have brought about the present position, and we propose now to discuss, in a general way, the best protective measures and financial policy to give us relief in this country. We, like the whole Empire, are faced with the problem of adjusting our economic and financial system to an entirely different set of conditions to those obtaining before the war. We need careful inquiry, clear thinking, and bold decision, but, as a basis, we must have a firm conviction that if we are true to our country our future is assured. To sit still and wait is no use whatever. ENTERPRISE AND WORK.

One of the results of the war has been a complete change in the trade equilibrium. The coal position in England may result in-her taking a lower place in the manufacturing world; other nations to whom the Avar ga\ r e unique opportunities to establish industries and capture markets for manufactured goods have now entered into competition, and international rivalry is bound to be intense.

It is a time for sound enterprise, public economy and hard work, and the country which “slacks” is doomed. Yet it is a curious outcome of the war that large sections of the people seem to be permeated with the idea that they can lead more comfortable lives and do less work than they did before. One has only to look at any of our occupations and see that the output per man has decreased alarmingly, in spite of higher pay. The result is that the services rendered cost far more than ti'.e increased pajunent warrants, and, being passed on to the consumer, adds to his burden at a time when he has almost more than he can carry to pay for the war. Impoverished and burdened as we are by the war and our improvidence, we must, if we .wish to relieve the position, work together, get busy, drop every kind of loafing, and thus cheapen the output. . L We have seen it argued that the present unemployment and financial stringency is due to over-produc-tion Ave differ with this view as we believe that facts point to the handling of produce by the Government at Home to avoid loss, combined with the diminished spending power of consumers abroad (due to the mischievous strikes and stoppages of industry) as having caused the present fall in export prices, which

has hit New Zealand so hard. When, however, it conies to coal, houses and other products of enterprise locally, there is no doubt that decreased efficiency, combined with increased cost, has placed a burden on the community beyond calculation. This is obvious to anyone who thinks. The evil grows as it progresses : restricted output, combined with high payment for services, increases the cost, and this curtails the consumption ,by lessening the demand, resulting in hampering the industry, and / unemployment. ECONOMY. Both public and private expenditure may well cause the alarm which has been repeatedly voiced by manv of ourj-leading citizens and by this League during the last 12 months: yet, though it vitally affects the financial position of the country and everyone in it, no warning was taken to meet the slump which was obviously coming, and even now the repeated advice of men who know, appears to fall on deaf ears. Government, municipal, and private waste and expenditure still obtains at a time when (to quote the president of the Wellington Chamber of Commerce) “the instinct of self-preser-vation” should rouse the Government and the public to curtail unnecessary expenditure. We do not advocate the curtailment of all expenditure, but urge that it be limited to propositions of a productive nature —rto cut out frills and non-essentials, ko concentrate on things that really matter, is, in our opinion, essential. This applies to employers as well as employees; it applies co-operation in big things in place of the constant squabbling over little things which has been so prevalent during the last few years, and has done so much to aggravate our present troubles.

TAXATION AND LEGISLATION. There is room and vital necessity for a complete overhaul of the incidence of taxation. It has reached such alarming proportions that industry and enterprises are being hampered. President Harding, addressing the Senate on July 12, is reported to have said: “It is unthinkable. to expect a business revival while maintaining excessive taxes.” In this country it is not pnly the amount of taxation, but the inequitable distribution of the burden that

is handicapping the development of our resources. We admit that taxation is necessary to carry on, but it should be made in such a way that enterprise is not hampered. This is too large a matter to discuss at present, but, as stated earlier in this article, we have to face new economic conditions, and we should like to see the most careful inquiry by the best available experts, Avith a view to a bold revision of the whole incidence of taxation, and the best Avay to con- 1 serve available resources so as to avoid any risk of increased burdens. It should, at the same time, be seriously considered by Parliament whether thetime has not come when they should modify regulations and legislation which prevent the normal movements of capital, and Avhich, by artificial controls and subsidies, interferes with the natural laws of supply and demand. No consideration of political expediency should stand in the way of such national needs.