HOOVER'S METHOD

Evening Post, Volume CIX, Issue 40, 17 February 1930, Page 10

HOOVER'S METHOD

STOCK EXCHANGE PANIC

ADDRESS TO BUSINESS MEN

A CALL FOR EFFORT

Iv finance, commerce, and industry, the nations.of the world are so iuterdopendent that a set-back in one country may easily load to a crisis in another. A crash on the Stock Exchanges of London or New York may reverberate in all parts of the globe, and should tho slump bo prolonged the consequences in New Zealand —for she sells her produce on tho world's markets —may be almost as calamitous as they at the scat of the disaster. Certainly the Dominion is n#t so seriously affected by un American financial depression, as she would bo by one in London, but London would suffer if the American slump was prolonged, and New Zealand would feel the effects'in turn. To New Zealand then the efforts of President Hoover to avert a disaster in American industry, consequent on the Wall Street debacle, must be followed with interest. By his intervention to stive tlio finances and industries of the United States, the President becomes a world figure, and judging by the reports to hand he is applying to his task the samo thoroughness that marked his activities in the post-war rehabilifatlor of the battlescarred countries of Europe.

"I think that almost any human problem can bo solved if those interested in it will come together in one room and talk it over," Herbert Hoover has been quoted as saving long before he became President, and it is this plan he tried when he called together more than 400 "key men," representing every branch of industry, finance, trade, and commerce in the "United States in order that a means might be devised of stabilising and stimulating business. This impressive body of men, representing an enormous amount of corporate and individual wealth, was described by one of the speakers as "the greatest cross section of American industry that has ever been gathered together.'' Mr, Hoover outlined the work- and the responsibility before them and his lead imbued all with a desire to aid in accomplishing the purposes of. the meeting. The effectiveness of the President's address lay in arousing a spirit oi: co-operation, and most of his remarks were applicable not only to the United States but to every country that is suffering from the ills that our complicated civilisation is heir to. DANGER OF PESSIMISM. He did not fail to perceive the danger of pessimism, and admitted that irreparable losses had been suffered. He first sought to attain a new attitude towards tho depression. But he did not rest with a mere psychological change, necessary though it, may be at the beginning; ho then as a practical measure called upon those present to study the cycles of trade and to endeavour to carry out tho idea of furnishing a sort of balance wheel to keep ,the engines of manufacture, transportation, building, and export trades running steadily. "There has necessarily been some unemployment, starting with diversion of capital from the channels of business into speculation, and, after the break, by some reduction in the demand for luxuries and semi-necessities f roi i those who met with losses," ho told tho conference. "But the large effect was to create undue pessimism, fear, uncertainty,' and hesitation in business. Theso emotions, being emotions, if they had been allowed to run their course would, by feeding on themselves, create difficulties. The American mind is prone to revert to previous occasions when we were much less, able to organise to meet such situations. "There are potential difficulties which cannot be cured with words. If we could do so, the merest description of the fundamental stability of our vast organism of production and distribution, touchedwith the light of the future of tho United States, would cure it instantly. The cure for such storms is action; tho cure for unemployment is to find jobs. RECOVERING CONFIDENCE. "We have, fortunately, since our pro-, vious crashes, established the Federal j Reserve System. The first step in recovering confidence was made by the I powerful effectiveness of that system and the strong position of the banks, the result of which has been steadily diminishing interest ra J-s, with a smooth and rapid return into the channels of business of tho money previously absorbed iv the speculative market. This is a reversal of our historic experience and is a magnificent tribute to the system. Captial is becoming more abundant in all parts of the country, tho bond market is growing stronger each day and already public issues held back for months have begun to appear. "The second action necessary to maintain progress was the standard set by leading employers that, so far as they were concerned, there- would be no movement to reduco. wages, and a corresponding assurance from the leaders of labour that not only would they uso their utmost influence to allay labour conflict, but would also co-operate with the employers in the present situation. These assurances have been given and, thereby, we not only assure the consuming power of the country, but we remove fear from millions of homes. "The third line of action has been to undertake, through voluntary organisation of industry, the continuity and expansion of the construction and maintenance work of the country, so as to take up_ auy slack in employment which arises in other directions. The extension and organisation of this work are tho purpose of this meeting. BALANCE '"HEEL OF STABILITY. "The greatest tool which our economic system affords for tho establishment of stability is the construction and maintenance work, the improvements and betterments, and general clean-up of plants in preparation for cheaper production and the increased demand of the future. It has long been agreed by both business men and economists that this great field of expenditure could, by its acceleration in time of need, be made into a great balance wheel of stability. It is agreed that its temporary speeding up to absorb otherwise idlo labour brings great subsequent benefits- and no liabilities. "A very considerable part of our wage earners are employed, directly and indirectly, in construction and the preparations and transportation of its materials. In the inevitable periods when the demand for consumable goods . increases and labour is fully employed, tho construction and maintenance can slacken and we actually again gain in stability. No one would advocato tho production of consumable goods beyond tho daily demand; that in itself only stirs up future difficulty. "Another of the great balance wheels of stability is our foreign trade. But in stimulating our exports we should be mainly interested in development work jabroad, such as roads and utilities, which increase the standards of living of peoples and thus the increased demand for goods from every nation, for wo gain in prosperity by a prosperous world, not by displacing others. "All of these efforts have one end — to assure employment and to remove the fear of unemployment. "The very fact that you gentlemen

come together for these broad purposes represents an advance in the whole conception of the relationship of business to public welfare. You represent the business of the United States, undertaking, through your own voluntary action, to contribute something very definite to the advancement of stability and progress in our economic life. This is :i far cry from the arbitrary and dog-cat-dog attitude of the business world of some thirty or forty years "And this is not dictation~~or interference by the Government with business. It is a request from the Government that you co-operate in prudent measures to solve a national problem. A groat responsibility and a great opportunity rest upon the business and economic organisation of tho country. The task is one fitted to its lino initiative mid courage.

"Beyond this, a great responsibility for stability and prosperity rests with tlio whole people. I have no desire to preach. I may, however, mention one good old word —work."