Wairarapa Daily Times [Established Over 50 Years.] THURSDAY, 29th APRIL, 1933. AMERICAN FINANCE.

Wairarapa Daily Times, 29 June 1933, Page 4

Wairarapa Daily Times [Established Over 50 Years.] THURSDAY, 29th APRIL, 1933. AMERICAN FINANCE.

In a letter addressed to the Chairman of the Committee on Finance of the United States Senate, Dr. Nicholas Murray Butler, President of Columbia University and of the Carnegie Endowment of International Peace, furnishes an enlightening analysis of the present financial situation in the United States, and of the measures whereby its unsatisfactory features should be remedied.' The gbeat lesson which had already been brought home by the hand of adversity to the majority of other nations has now been forced upon the American’s-mind, the lesson, that is, that “the present economic and financial crisis is in no true sense national,” but rather world-wide and international in character. How far most of the countries of the world have been impoverished through the diversion of their capital by the great war to the sefvice' of arts that are unproductive in peace may never be known; but the present generation is undoubtedly paying for some part of the wastage. Moreover, the habit contracted during the war of speeding up supplies regardless of cost tended to produce an atmosphere of recklessness arid speculative activity that long survived the war itself and led the world of business headlong to a slump. Not only the aforesaid conditions, namely, the destruction of capital or its diversion from the uses of peace, and the all but world-wide outburst of speculative activity, but other factors also have contributed to the depression of finance. Several of these are enumerated by Dr. Butler. Mass production, both in industry and in agriculture, has been displacing hand labour more rapidly than it can be absorbed in new. and profitable directions.

Monetary gold lias been accumulated in a few centres to the detriment of confidence in the various national currencies. During 1 the boom period also the cost of government increased to an extent that could not be maintained in comparatively lean years. Democracy itself, in almost all countries except those which have been accustomed to it for centuries, has become suspect, and in several great countries has given place to forms of government which are revolutionary in fact, if not in name. Under these conditions re-

forms have become essential. Although it must he conceded that the United States are in a favoured position to practice inflation to a certain degree, in that they owe no foreign debts and possess a store of gold which might be employed to prevent the possibility of a debacle, Dr. Butler advocates, not inflation, but a course of economy such as the Premiers’ Conference lias been the means of putting into operation in Australia. Public budgets of all kinds, lie maintains, must be balanced, and the habit of publicly borrowing brought to an end. As Adam Smith wrote in “The "Wealth of Nations”: “Great nations, are never impoverished by private, though they sometimes are by public, extravagance. ’ ’