BUSINESS CONFUSION

Gisborne Herald, Volume LXVI, Issue 19997, 24 July 1939, Page 14

BUSINESS CONFUSION

WORST IN HISTORY OF N.Z. UPENDING FROM RESERVES TRADE JOURNAL'S REVIEW “Business has ..been thrown into the worst confusion which has existed in our century of existence as a British country," says the "New Zealand Draper and Clothier and Boot Retailer,” commenting on the policy of the Government. “No one knows exactly where he stands in the matter of supplies of goods, either from local or overseas sources. It is not easy to sell goods with the iormer advocates of free spending now urging everyone to save, but the problem of replacing stocks sold is even more difficult than our job of selling them. “The Government’s vigorous policy of ‘pump priming’ boosted trade, raised wages, reduced working hours, enlarged Government expenditure, relieved unemployment, and increased social services. But increased wages and salaries all round, with shorter hours, and a five-day week in many industries, soon had the inevitable ..raisingkpro'ductian costs., and reducing the ivolume of. output. ■ The people had to pay. more and were producing less goods. With the first blow of injected spending power buyers flocked to buy.goods to refurnish reclothe, and rehabilitate themselves after years of forced economy and self denial. Manufacturers here and overseas were rushed with orders to meet the sudden demand for consumers’ goods. Not Natural Demand “But 'it \yas not a natural or normal demand, and when the first hunger for goods was appeased the demand eased off, though commodities continued to pour into the . shops, stores, and warehouses. Much of the heavy State expenditure was not e° in g to the production of goods, or in capital expenditure for future wealth production. “No increased income was coming from our land and no new industries were starting. Then it began to dawn on us that we were living beyond our income, and that standards of living cannot artificially be forced beyond that yielded by our national production of wealth, unless some Santa Claus scatters borrowed cash or issues 1.0.U.’s galore. "Had our large army of unemployed been spread over productive as well as non-productive works, and if more wealth had been won from our land, mines, forests, etc., the increased national income might, have continued the new economy of spending for prosperity; but actually farm production was falling off, and after the election last October it was admitted that we had been spending from our reserves instead ol' current wealth production. Overseas Funds “Reserve funds overseas from the sale of exports were disappearing rapidly, leaving insufficient to meet the public liabilities in London, That •was not because we were importing too miany everyday household requirements, for these form only a small portion of our total imports. In spite of this proven fact the Government became panicky and rushed to stop almost all imports except their own requirements. “So jhe closing of New Zealand's first century finds the business world and trade generally in a state of confusion and uncertainty. In spite of the embargo bn imports reserve funds in London remain far below requirements for State debt commitments, and none are available or permissible for normal trade requirements to supply the wants of the people."