WELLINGTON NEWS

Hokitika Guardian, 9 April 1931, Page 5

WELLINGTON NEWS

A HARD YEAR. (Special Correspondent.) Wellington. April s. 'Phe year 1931 promises to earn an mievialile reputation as l>e.ing a year |of national budget deficits. We have I been made aware by the Prime Minister that, tile vea r just closed will, when tile accounts are made up, disclose a deficit of £1.250,000 or more: the Chancellor of the Exchequer, some weeks hack, stated that the year that ended on March 31st would reveal a heavy deficit which has been variously estimated at £‘”25.000,000 to £*39,000,000. All the Australian State Gt)\. eruinents and 'the federal Government will show deficits, which is a chronic feature of Australian finance; South Africa ks saddled with a deficit, so is Canada, and th e United States at the end of June is expected to show a balance oil the wrong side of the ledger, approximately to £40,000,000. The finances of European and Latin American Countries arc unknown quantities, blit it is not unreasonable to suppose that they "‘ill all show heavy deficits. These deficits are, like the slump, no inspectors of countries, for we find so wealthy a country as America with its huge gold holding, just as heavily hit as the countries which are struggling along on a minimum of monetary gold. The trade depression is being felt relatively severely by all countries, thus reducing all to one level of adversity, and 1931 promises to be one of the dullest and gloomiest years of commercial history. The universality of the slump and its severity are the certificates that can be awarded to the year 1931 ; at the same time the vear will mark the be-, ginning of recovery. Because the slump is severe and universal, universal efforts ai'e being made to deal with it and, if the politicians of all countries display common sense, which is asking a great deal recovery will lie relatively rapid, but if economic problems are to bo dealt with by politicians of the mentality of Labour leaders in Australia arid New Zealand, the recovery will bp slow in coining. From 1915 until about the middle of last year, with just one break in 1920-21, we have enjoyed prosperous times, our export industries were thriving and we were able to borrow abroad many millions each year. Before the war. if we borrowed £2.090,000 we thought ih p Government was running wild with extravagance, but since then we became used to foreign loans of £5,000,000 and six millions a year, and in one year the loans aggregated £9.000,000. With the high prices for produce and heavv borrowing, we levelled in a fictitious prosperity and Governments, like individuals, with plenty of money ,to spend, spends freely and foolishly. There is no doubt that we have Indulged extravagantly in so-railed social and hunrAiiitaruui legislation. \\> did not. think it. was extravagant when we. bad borrow od millions and exports millions rolling in. We thought in millions and spent accordingly and the country entered into commitments that are now a ver\ heavy burden. The exports millions have contracted, and borrowing cannot be renewed on the old scale and so, instead of thinking and spending in millions, we must think and spend in thousands; in other words, we must now let common sense and prudence have control and forget all about halcyon days of extravagance.

It is but natural that every one should be depressed in a depressing period, Imt pessimism will not help u« any. The slump is the natural and inevitable economic result of wholesale breaches of economic, principles and laws, and. if we recognise that and set about doing what is right from an economic point of view, we shall mover. We must do what it right, that is inevitable, but we have not yet started in the right way to do what is right. The generation which to-day is feeling th c slump with considerable harshness, has been in the habit of thinking in pounds, and now it has to think in shillings. When a lad started his working career. he looked to receive not less than £T a week. It was big money for a lad and he soon learned to thing big and to over estimate his value as a worker. Now it is necessary to think more clearly and less extravagantly, '1 he slump, bad as it may he, is a real blessing in disguise, at least for New Zealand, for it will leach an extravagantly inclined people the value of thrift and fcound economics. The switch over from mad extravagance to sanity is taking place now. and one has merely to think what a taxi fare was three years ago and what it is now, to realise the change. In many trades the same thing can lie observed, and they all indicate that we are now about, to have the cost of living on a lower basis aid lower wages, therefore. will not imperil the standard ol living.