THE CODES’ BATTLE

Hokitika Guardian, 28 October 1933, Page 7

THE CODES’ BATTLE

THE AMERICAN SITUATION. Lute Mail news supplies interesting ■ details of tile position in tile United States where tile trade and business codes are being enforced. A New York correspondent writing to the “Times”, last month, says:— it lias now become abundantly evident that the United States cannot be rushed back to prosperity. Valuable as is the enhusiasm which ha s been engendered in many quarters by the N.R.A. campaign, it is not the enthusiasm of unquestioning patriotism, accepting dictation blindly, seeking no reasons for what it is asked to do. Industry and trade are willing to co-operate with the Government and the Recovery Administration, indeed eager to do so, but they are not ready to forget for a moment that business is business and not an experiment in altruism, or in Socialism. Neither is organised labour ready to forget the long struggle it has made to get a foothold in all the basic industries or to forgo its claims at the moment of greatest opportunity. And so, with labour and capital stoutly contesting for an advantage, and with industries and the component parts of industries warily eyeing each other, the Administrator of the National Recovery Aict and his deputies are having plenty of trouble keeping steerage way on j their enterprise. If there were confidI ent belief everywhere in the ultimate 1 success of the N.R.A. plan, the difficulties of organisation which have arisen in the past few weeks would not, probably, seem to be particularly formidable ; but in tlie absence of such belief they stand like mountains in the way. Blaming the Banks. t The campaign has now reached what may be its critical stage, the period ’ when, with failure looming up as a possibility, its chief supporters are beginning to find fault with all those who are not ready to back it regardless of every other consideration but “patriotism.” Thus, recently, General Johnson, the Administrator of N.R.A., asserted with a considerable show cf irritation that the commercial banking system of the country was not rallying to its support. Business, he said, had i made a remarkable response to N.R.A., but there had been a stagnation of bank credit.. He did not exactly blame the banks?, but lie said that he was going to “lay his case” befero the Federal Reserve Board and the Reconstruction Finance Corporation. Just what he meant by that he did not say, except that he did not intend to permit the N.R.A, programme to be wrecked because of what he described as the failure or the inability of the banks to uphold the Administration’s hands in the movement to increase industrial purchasing power. He expressed sympathy with the banks, however. A bank makes a loan on the basis of faith in the risk (he was quoted as say- ' ing). I don’t believe that anybody can

force credit on any other basis —faith in the risk and faith in the future. But this one thing must be remembered. We have been in the downward movement for a long time. We have had a downward index for the last four years and the bankers who have made loans have been stung. We will have to establish a basis of confidence i'n the future before the bankers will resume the extension of' credit, and we are trying to do that as fast as possible. In brief, as has happened before, in every attempt since the depression began to increase business activity by expanding credit, the banks are not getting credit into the bands of the public. And the reason is the same as it has always been : eager though they may be to get their idle funds at work, they can. find relatively few enterprises or individuals to whom it is even sMe to lend. It is not the mere uncertainties of business that they are afraid cf, fothese their experience can tell them how to appraise. It is uncertainties and risks magnified a hundred times by the thread—to some people the promise—of monetary inflation. Inflation Looming. Monetary inflation is not by any means just a bugaboo, much as people would like to think it 'ls. It is all very well to assert (without, incidentally, a grain of proof) that the Administration armed with the powers to inflate, has no intention of using those powers, but anyone with eyes to read and ears to hear must he aware that every week which brings nearer the convening of Congress brings nearer, too, currency inflation. If by the time Congress meets again, in January, the Administration's.promises of reducing unemployed by 5,000,000 or 6,000,000 persons have not been fulfilled, and the price-level of commodities and the average level of wages are not substantially higher than they are now, the demand for currency inflation will probably be irresistible. Even now Senator Thomas, author:of the inflation amendment to the Farm Relief Bill, 'and many other eager exponents of. inflationary principles are demanding that the Treasury put forth at.once an issue of non-interest bearing, notes as currency. “Depression of the dollar from its gold parity,” wh f ch is .their professed object, cannot be accomplished, they say, by the “goldInden Federal Reserve banks issuing their own notes,” and so it must b? attained by direct’Treasury issuance of notes.