HARD DOCTRINE.

Waikato Times, Volume 110, Issue 18407, 14 August 1931, Page 6

HARD DOCTRINE.

The economic world ploughs on through the depression, the economic authorities dispute and disagree, and the ordinary man, producer or consumer, suffers and does not know where to turn for help. Professor Sprague, the economic adviser to the Bank of England, in two recent public addresses has argued at length that this is a major depression from which it is beyond the power of bankers to rescue us. Two directors of the Bank and probably the majority of economists reply that there is a very great deal that the central banks could and should do. Between the "monetary school," which thinks that the central banks through their control of credit can help to produce an upward movement of prices, and the “equilibrists," who hold that the industrial structure must, at whatever dislocation to itself, become adapted to the present low price level of primary products, there is not, on the face of it, much room for accommodation. The truth probably lies in between, and we should look for action by a combination of remedies. But if Professor Sprague interprets Hie mind of the central banks correctly, their present mood is to postpone measures of credit expansion until “something more nearly approaching the former equilibrium between agricultural prices on the one hand and manufactured goods on the other" has been reached. In oilier words, the prices of manufactured goods must be forced down, and with them wages, salaries, and other costs, before credit expansion can begin. It is a hard doctrine, and, were it logically pressed, one sliudders to think of Hie economic consequences and political reactions. The adjustments in labour costs, which it is pretty generally held are essential to meet the peculiar problem of this country's high costs, would be trifling beside the adjustments needed to produce the new world equilibrium, and, in Hie temper of modern democracies, they would not stop short at wages, but would go on to all forms of money income, perhaps to political instituions as well.