AMERICA’S PLAN

Hokitika Guardian, 25 November 1933, Page 6

AMERICA’S PLAN

NOTES AND COMMENTS America’s great economic experiment is being watched with intense interest by the rest of the world, and particularly by Great Britain, whose fortunes are so clearly linked to those of the United States. Mr Roosevelt has been compelled to extend his operations to deal with the economic consequences of his interference with the natural laws of supply and demand, for it was, oi course, inevitable that the effects of his action should be felt throughout the field of business, just as the ripples caused by the impact of a stone on, the surface of a pond run to its periphery. The point which chiefly concerns foreign countries is the effect of changes in the internal price levels on America’s competitive power abroad. She can by tariff protect her domestic industries from competition from other countries in which costs are lower, but it is another matter to put her exporters in a position to obtain competitive orders from abroad. DIFFICULT PROBLEM

It is difficult to see how her export trade can be maintained unless some scheme is adopted for subsidising it. Inflation of the currency would in effect subsidise export trade, but there would still remain the difficulty of obtaining payment for visible and invisible experts in excess of visible and invisible imports. If the tariff is designed to shut out imports America can derive little advantage from an excess of imports beyond ability to invest abroad. It is too often forgotten that in happier days American, tourists spent some £140,000,000 abroad, in addition to the large sums invested in foreign countries. That expenditure went a long way towards balancing the total transactions of the country - with the rest of the world, hut in present circumstances the return of the tourist traffic to its former dimensions seems unlikely. THE DILEMMA For many years it has been argued in these columns that there- is no logical reason why the American people, inhabiting a vast area of the globe’s surface, should not enjoy a considerable measure of prosperity even if their foreign trade were restricted to an exchange of American products for such commodities as are essential to the country but not capable of production in it, but, of course, such a consummation is not in the least in harmony with American ambitions, nor, probably, within the scope of practical politics. Meanwhile there is no escape from the dilemma that if the United States elects to work for a heavy favourable balance of trade she will have to spend or invest the proceeds abroad or reap- no benefit. LABOUR UNIIONS IN U.S.A. One of the most- striking changes brought about by President Roosevelt’s national policy is the great strength which it has ; imparted to the labour union movement. This had made litthi progress in the United States for very many years. The N.R.A. programme entails the recognition (by employers of existing unions and will result in the formation of new organisations. Early this month it was announced that already 2,500,000 men had, been added to th e unions as.a result of the National Recovery Act. This development is to some extent a safeguard against inflation, for the labour leaders will do their utmost to prevent the workers from suffering any cut in their real wages such as would result if the exchange value of the dollar depreciated.