The Wanganui Chronicle WEDNESDAY, FEBRUARY 7, 1934. THE AMERICAN EXPERIMENT

Wanganui Chronicle, Volume 77, Issue 32, 7 February 1934, Page 6

The Wanganui Chronicle WEDNESDAY, FEBRUARY 7, 1934. THE AMERICAN EXPERIMENT

W ITH the cutting down of the gold content of the dollar to 59.06 per cent, of its previously established content, the Administration of the United States of America has gone a long way in its programme of endeavouring to induce prosperity by credit manipulation. The basic idea of the American experiment is to reverse the spiral of prices and spending, both forcing down each other. When prices are inclined to fall, then buyers hold off the market. This accentuated the downward movement. Recovery must be brought about by an increase in spending. The N.R.A. codes were formulated with the object of increasing the spending power of the public. To this end, hours of work were reduced so as to spread the wages paid among a larger number of recipients. These being near to the necessity-base, would be compelled to spend at their maximum rate. Accumulations of unspent purchasing power on the part of consumers would be offset by improvements in demand for workers. If the industry could be so organised, then it was required to pay higher wages than depression rates. This put up costs ol production. How high these costs of production were to be in any particular instance, nobody could say; but the credit facilities for starting the machine in the anti-depression direction were pumped into the banking structure at, points where such an activity was possible. The Government got behind business with the object of giving it a shove. The weight of debt which hung over industry was, however, so great that a readjustment of the relationship btgveen the debtor and the creditor was called for. The objective aimed at. was the inter-economic relationship which prevailed in the year 1926. The attempt has been started under the most difficult of economic conditions, but in a most favourable psychological atmosphere. The scheme is now under weigh and it will soon be apparent what, results will come out of this vast and courageous attempt to take hold of the factors and control them by Government action. Two factors must always be borne in mind by distant observers of this experiment, and these are: One, that the United Stares of America is approaching to a condition ot economic self-containment; and two, it is a creditor country These two factors distinguish it from Australia and New Zea land and, therefore, it is not possible that because America ha? succeeded in achieving certain results by some means, those same means will necessarily accomplish the same results in eithei Australia or New Zealand.