The Dominion. THURSDAY, MARCH 16, 1939. CONSTRUCTIVE CRITICISM

Dominion, Volume 32, Issue 146, 16 March 1939, Page 8

The Dominion. THURSDAY, MARCH 16, 1939. CONSTRUCTIVE CRITICISM

The president of the Wellington Chamber of Commerce, M l ’- F. E. Pattrick', is to be complimented for the valuable material for constructive thinking he has given the public in his admirable address at the annual meeting of the Chamber on Tuesday. His emphasis on the principles of sound government is particularly timely. Ihe Government has embarked upon a campaign to stimulate our secondary industries. Mr. Pattrick agrees that this is good policy, but to this endorsement he makes certain important reservations. One, a vital consideration, is that in the effort to foster the manufacturing industries, the “basic primary industries” should not be overlooked. “We shall get somewhere,” he says, “if we take our essentially rural economy as the basis, and on top of that raise a pyramid of desirable diversification of production.” It is obviously desirable that home manufacturing should be developed in order that the country will have a reserve of resources should overseas supplies be cut off, and that the market for productive labour may be extended. Encouragement of the manufacturing industries, therefore, should follow a deliberate design, even if, as Mr. Pattrick suggests, it should be necessary “to encourage the production of certain key commodities from a national security point of view upon a basis not strictly economic, such industries to be regarded as a form of national insurance, in the event of war or other national emergency.’ But secondary industries cannot be expanded progressively if the return from the primary industries, the main reservoir of our national wealth, is allowed to decline in quantity and value, as is happening now. Taxation and costs have become so serious a handicap that certain classes of farming are no longer economic propositions, and land is going out of production. Failure to give due and prompt attention to this aspect of the country’s economic life will react on the progress of the secondary industries. Home manufacturing requires also relief from excessive costs of production, and very definite guarantees against restrictions and interference on the part of the Government, which discourage investment. One discouragement is the weight of taxation, which, Mr. Pattrick declares, “has nearly doubled per capita during the last six years,” and shows no sign of being reduced. “Moreover,” he adds, “the social, financial, and general economic policy at present being followed must require, the Joad to be materially increased by further direct or indirect taxation.” Investors quite properly look for a return on their capital, and therefore are reluctant to invest when profits are taxed so heavily, and production costs so high, as to leave them with a very faint prospect of obtaining this. A substantial amount of investment capital comes from savings. But Government policy has largely weakened the incentive to save. As Mr. Pattrick observes, free spending may be good for trade, but there is a longer view than that: Do we not have to be careful also that the branches of the tree are not forced into a growth which is beyond the capacity of the roots to provide continued sustenance for? How much of the greatly increased rates that are being paid for the services of labour is being saved to provide new capital resources for new productive enterprise, and for future security for thp individual in the edmmunity? . . . Standards of remuneration are at once threatened if, instead of storing our water, the dam which comprises the resources which are built up of savings out of earnings is allowed to run dry. If investment is discouraged, saving for investment, which is essential to the solid growth of the community, and an artery of industrial expansion, will gradually lose its incentive. Constructive criticism of this kind should help people to think for themselves; to realize how things are drifting, and where the faults lie. It should, therefore, be welcomed and carefully digested. Even among those in sympathy with the Government’s aims there are probably many today who are beginning to doubt whether these will be permanently achieved by the policy it is pursuing, and who cannot but be impressed by Mr. Pattrick’s admirably dispassionate critical analysis.