Business on the Dole

Waikato Times, Volume 116, Issue 19451, 15 December 1934, Page 13 (Supplement)

Business on the Dole

THERE CAN BE NO DOUBT that the operations of the numerous government recovery institutions, loan corporations, bond guarantees, treasury underwritings, subventions and subsidies of •the past' two years have prevented many persons and institutions from going at onoe to the wall. ... , That is what the measures were meant to d<s. But whether such success as has been had in this direction has been ultimately beneficial to the 'community or to anyone In it may be gravely doubted. * * * * We have less -than half as -many.hanks as we had ten years ago, and about 16-18 per cent less than we had at 'ljhe beginning of . . 1933.Jf We have not had many railroad recelver- ' ships, but our railroads, under the influence of the various exactions of the Federal Government in the way of pensions, exorbitant wages and heavy taxation, are still unable •te meet their fixed charges and are likely to Continue in that Condition co long as present Federal policies prevail. Farm credit and urban mortgage credit aie practically extinct so far as any reason foi expecting advances of private funds in tlm •future is concerned, and are not likely to recover their older status for many 'years. The idea of self-support in business has received a very serious shock. “ Recovery" in the real sense of tlie term is about as fai off as it ever was. Unemployment, estimated by the American Federation of Labour at over 10,000,000 persons, and by the United States Chamber of Commerce at perhaps three-quarters of that figure, is about as menacing as ever, if we/eliminate from account those who are employed on artificial government work. The various estimates of savings and income of the community seem to show conclusively that our present expenditures In relief, unproductive public work's and other drafts upon national income are probably reducing our actual capital supply, or, in ’ other words, that we have as a nation no net savings whatever. This merely signifies that there is no way of “making a silk purse out of a sow’s ear. Unsound or depreciated bank assets may be “carried” for a long time with government funds, hut eventually they are Worth Only What They Will Bring. Sound and safe banks may be 'compelled to guarantee the assets of weak or dishonest Institutions. Railroads that never have earned a dollar, and never can do so, or that are overwhelmed by national, State and' local taxes, may be kept from bankruptcy when the government guarantees liieir bond's. That is merely another way of saying that the community can, if it so desires, carry on businesses and enterprises Unit do not return an,income and never can, but that when , ji applies its resources in this way, it works i for nothing, or even, as already intimated, I pays, through reduction of its own capital or principal, for the privilege of operating enterprises that should give place to others. “ The community may put labour back on

America’s New Deal Experiment.

(Professor H. P. Willis in Corrent Problems)

■the same income it enjoyed in i 92 - a ®' labour organisations insist it shall, but •oannot do so without reducing Js capital investment, unless labour be willing and able to produce more wealth than it The community may relieve the fa ebv his indebtedness, but it cannot thereby, •stimulate a willingness on thepartef who have saved a few hundred dollars xo invest these savings In farm mortgages and thereby to permit improvement it takei place in farm equipment or in farm fertility. A system of lending based upon a preference to those who have been Unsuccessful In Making Ends Meet, whether through lack of ability, carelessness or sheer misfortune, is a system that maintains in existence and .operation a « ■of unprofitable and unproductive business entemrises. The remedy is not to peg them but to change tile conditions that pioduced them. Such a system as we now foster reduces .the wealth of the community and increases ’its liabilities. . • • Admit (which the present writer does not concede in the least) that it will be necessary to continue a system of governmen ■management and .subsidising of all sorts of enterprises through the extension of. cr edit, and that the great brood of .organisations which the New Deal has brought into existence are destined to a long life, the question still remains, how shall they be condUShan they, in fact, be organised with the definite Intention of promoting the establish ment and successful operation only of selfsupporting business enterprises, and shall they devote themselves to careful cred t analysis, based upon the familiar canons or worth and liquidity which have been worked out in past years? If so, they will merely •resume the application of what has been called “capitalism,” animated by the profit they continue as eleemosynary, semi-political institutions whose effort is to prefer borrowers who are unable to get funds elsewhere and Incapable of making a profit by using them when obtained? If so, and in proportion as such institutions succeed in Diverting the Savings of the Community into unprofitable production, we shall confinue lo witness unfair competition, indisposition on tiie part of the independent business man to borrow from his hank, coupled with an equal indisposition on the part of the bank io lend; a refusal to take risks, of the natural business variety, and a growing inclination to apply for accommodation to the government rather than t.o seek capital in quarters where it must he paid for and vvheie loans will he assigned in accordance with the ability of the borrower to make use of them successfully. ’ This is the choice which is now presented to the business community of the United States. It is a choice in whose making every business man is obliged to bear his part. It is a choice between the economic parasitism of the New Deal and the self-support of what is called the old.