CAPITALISM ON TRIAL

Waikato Times, Volume 114, Issue 19047, 11 September 1933, Page 9

CAPITALISM ON TRIAL

ITS LAST CHANCE.

A SIGNIFICANT WARNING.

POSITION OF SMALL EMPLOYERS

(By T. C. List.) The following is the seventh of a serlos of articles from the pen of Mr T. C. List, of New Ply- \ mouth, District Governor of Rotary for New Zealand, who has returned from attending the International Rotary Conference at Boston. In the present article Mr List analyses the changed conditions under which capitalism Is operating, and describes the conditions of small employers In relation to the Industrial recovery measures. Working at high pressure as they were, it was quite impossible for the Administration to effect agreements in • all the vast .industries of America In a reasonable time, so General Johnson , Introduced what is known as a "blan- ■ .ket code" for general adoption pende ing agreements being arrived at In tho particular industries themselves. As is generally known the code objectives are to reduce hoyrs of work so as to spread employment over a greater number without appreciably lowering

. wages and salaries for the shorter r.-Aveek. ■—-i. A strong, patriotic appeal was made by the President to employers-to fall .-..■into line.. The appeal was supported by propaganda reminiscent of the Liberty War days. Millions of pieces of printed matter flooded the 'country, ' accompanied by a deluge of newspaper advertising, and campaign groups were set up to make a house to house canvas. Nothing was left to chance. Every employer who came into the scheme was given a "Blue Eagle" badge, signifying that he had joined the movement to assist the country out of its-economic slough, and It was openly declared that any who failed to respond would be boycotted. It was a "voluntary" drive but with the "big stick” always in the background.

Employers In Quandary. Many of the employers were in a quandary.’ They desired to assist the Administration in its aim to reduce unemployment and rebuild purchasing 'power, but could not see their way to increase their costs meantime without Increasing prices to consumers. President Roosevelt specifically directed them not to increase prices as they increased wages, and General Johnson was no less explicit on the point. "The tendenoy of higher wages-is higher prices,” he said. “If \ve do a thing like this and do not also put some control on undue price increases so that prices will not move up one bit faster than is justified -by higher costs, tho consuming publio is going to suffer, the higher wages won’t do any good, and the whole ■bright chance will just turn -out to be a ghastly failure and another shattered hope." Because employers are asked to do a certain Jhing which is coiitrarV to the established habit of business conducted for profit, it'was necessary to appeal to their patriotism and also to their fear of a boycott and other, forms ■of public pressure.

Problem' of Small Companies. It was found easier to bring In the large companies than the small employers in the smaller towns that collectively accounted for most employment. Most of the companies had reserves to draw upon, they were largely mechanised so that wages were a relatively small part of their costs, and they stood to gain from, the ■suspension of the anti-trust laws and •the rationalisation of industry, but the small businesses had been hard hit and were struggling to keep alive; labour costs were often decisive with them; they had less to gain from the new liberty to combine, and they were less sensitive to national opinion.

The aim of the Government to keep prices down meantime can well be understood. The first step in the recovery plan Is to place purchasing power hack into the pockets of labour, and this cannot be attained if prices of goods go up as fast as wages. In tlie long run, however, the fixed purpose is to materially increase prices over what they now are. President Roosevelt himself made this clear in a radio talk. "The Administration,” he said, "has the definite object of raising commodity prices to such an extent that those who have borrowed money will, on the average, be able to repay that money in the same kind of dollar which they borrowed.” But nothing has been disclosed as to what kind of dollar it is to be.

Objective of Inflation. Senator Thomas, one of the principal 'exponents of inflation and (he real author of the inflation Bill which President Roosevelt adopted, says that the desired objective is an average of tho period 1920-23, or 1926. But is there any practical alternative to the business and industrial dragooning process? Now that the “laissez fatre" policy has been dropped and the country is bent on trying out tho "New Deal," small a 3 well as big , business will be forced Into line or ' fall out.

Donald R. Rlchberg. general counsel of the recovery administration, another strong character, said in July that should the industrial control plan fail, it would not be a failure of government, but of the present industrial ■system, either proving the system fundamentally unsound or Indicting the present managers of incapacity to operate it successfully. He told the Merchants’ Association of New York that if the programme did not roll forward during the next few weeks they would ho indicted for incompetence by the suffering millions who are now giving to industrial leadership one more chance—pfrhaps the last—to justify its authority.

Warning to Capitalism. In these grave words he warned them : "There Is no choice presented to American buslnoss between Intelligently plannod and controlled Industrial operations and a return to the gold-plated anarchy that masquoradod as ‘rugged Individualism.’ There Is only the choice presented botwoen private and public election of tho directors of Industry. If the privately elected boards of directors and tho privately chosen managers of industry undertake their task and fulfil their responsibility, they will end all talk of dictatorships and governmental control of business; but If thoy hold back and

waste these precious hours* If they take counsel with prejudice and doubt, If they fumble their great opportunity, they may suddenly find that It has gone forever.”

He assured his audienoe it was not his desire nor the purpose of the Administration politically to socialise industry, but that this could, not he avoided if business failed to do its part. *

A Rapid Improvement.

Mr Richberg put into forcible and striking language what nearly everyone, from President Roosevelt downward, feels about the situation in America to-day. Things were desperate and simply could not be allowed to drift on as they had been drifting, bringing down industry after industry, business after business, and rendering a third of the nation unemployed, However, the present experiment results, the economio state of the country could not possibly be worse than it was at the time Roosevelt assumed the reins of government. Already a considerable measure of success has been realised from the introduction of the various schemes to provide work. At the end of July over 2,000,000 had been reabsorbed, and General Johnson confidently anticipated that a further 7,000,000 would be added to the number by the end of the year.

The effect of the changes has been felt in business throughout the country. Confidence is being restored rapidly, capital is again being made available for Industry and business, everyone is more hopeful, and ea'ch of the last three months has shown a 'Steadily Increasing turnover in practically every business and industry throughout the country.

Hostile Criticisms. There are those, of course, who claim that this is but a flash in the pan, that such improvement as obtains is artificial in nature and cannot therefore bo sound or permanent and that the reaction to the Government's lavish spending of money can only bring harm to the country in the long run. Thoy point out that makeshifts and stimulants arc like oxygen gas—they often help to preserve life until the crisis is past, but thoy won’t reach the seat of the disease Itself. They say that if America would only deal with the verities it might got somewhere, that, for instance, if it would only trade with the rest of tho world and remove Its tariff restrictions so that' the world could trade with it in return and- come to an equitable adjustment of the Allies’ war debts, the way would be open to a real, permanent improvementBut America is committed to what has been described as a “glorious experiment,’’ and feels bound to give it a thorough trial.