MONEY AND BUSINESS AFFAIRS.

Manawatu Standard, Volume LX, Issue 141, 15 May 1940, Page 12

MONEY AND BUSINESS AFFAIRS.

DEPOSITS GROW LESS. (By “H.J.K.”) Deposits in the trading banks in Australia at the end ot March showed ■ a ueoime as compared with February, and tuere appear to be special reasons tor this. Tnc same phenomenon was noticed m New Zealand and ill our case it is probable that income-tax and social security payments were responsible for the shrinkage. It is doubtlut whether there will bo # any marked increase in deposits in the. coming months, for the scope tor saving is becoming restricted. The large increases previously noted wore due to import restrictions rendering a largo amount of capital immobile, and this capital found its wav into the banks. The iurthcr import restrictions should add to the deposits but for the fact that nearly three-quarters of a million pounds have been lent to the Government free of interest for war financing. The Government will need to borrow further sums for the war, and this will tend to further reduce the deposits. However, there is ample capital in the country for all legitimate purposes, but the scope lor using tins capital is not yet apparent, though the opportunity will arise later on. In the "United States some economists have developed a new economy which goes under the title of Matuie Economy.” In the April Letter or the National City Bank of New York-tins new economy receives attention. It is said that, born of the years of discouragement and disappointment since 1999, it has gained considerable currency in the United States. Briefly stated, according to the Letter, the central idea is that the United States is growing old, and progress is naturally slowing down. More specifically, it is pointed out that population growth is declining, that the United States has no more frontiers, and that no new great industries are in sight. From this the argument proceeds that opportunities to invest capital are no longer sufficient to employ the available savings, and that with less employment for capital there will be less employment for labour. Therefore, the Government must assume a larger managenient of affairs and, through its own enhanced spending and investment, supply in part at least the stimulus heretofore provided by private enterprise. . , The deductions would be in a large measure correct if the premises weic sound, but they arc not. They appear to be set out specially to furnish tlie conclusions arrived at. T o say that the United States as is known is old is absurd, for it is but a fraction of the age of the United Kingdom, and the United Kingdom still leads the world in methods of law and order, in good government, in trade, finance, banking, insurance, and in. shipping. Jll view of this the conclusion to be reached is that America’s economy has been, and still is, unsound at tlie base. It is also claimed that population growth is declining. May this not be due to tlie closing of the country to immigrants? ’[’hero has been a phenomenal growth in America’s population largely liecause of mass immigration in past (years. But declining population appears to be the universal complaint amongst

the white nations, and it is a question as to what extent the high standard of living has influenced the birth-rate. It seems to he accepted as a sound principle that a country to make progress must have cheap money. Money •is cheap or dear in relation to commodities. land, and other items that arc saleable. Tims, cheap money by raising prices adds to the cost of living and to enjoy the high standard of living one must forgo something. It may he expressed thus: Cheap money pieans dear land; dear land ■ means dear houses: dear houses mean high

rentals, and high rentals mean fewer babies. The population problem is fun(lumentally one of economics. POSITION OL INDUSTRIES. The claim is that no new great industries are in sight. This is an absurd statement to make, lor it presupposes that the wants of mankind have reached the limit, and the inventive lacub ties of man have run out. All history shows this to he a stupid claim. Let us take the recent inventions such as wireless the motor-ear and the aeroplane. Reflect on the millions of people who are earning their livelihood lit the manufacture and sale of these new things. Forty years ago, if a. doctoi in the 'country owned a dog-cart and horse, which together with harness was worth, say, £SO. lie was regarded as well set up. To-day a doctor needs a motor-car, and without it he would not lie fully equipped. A motor vehicle is now a necessity ill business as is the telephone and a number of other accessories that were not known filty years ago. New inventions seem to increase the wants ol mail. His inventiie capacity is not impaired and thcic ate many more useful tilings to be discovered. Out of this war we may lie sure there will come some of the use- | f>il things we want. It is also a very debatable question whether the opportunities to invest capital are no longer i sufficient to employ available savings. The remedy proposed by these American economists is simply “priming the pump,” which the Roosevelt Administration has been doing ever since 1933. Government interference in business is to be deprecated. Politicians have not the knowledge nor the aptitude for handling business matters. Their policy is compromise, which will not serve in business. Governments everywhere know how to spend lavishly and foolishly, and know how to tax 1 the people “ lavishly ard ruthlessly. 1 1 Business is best left alone and clear of 'politics. But this war will introduce a I! new economic aspect. When it ends wo I will have a world of impoverished peo- , Jplo loaded with taxation, and forced into a lower standard of living. Affairs

must be adjusted and production be on a basis to meet the markets. Great economic changes seem to be pending—changes that cannot be avoided, and changes that should not cause alarm. The world will need the services of sound clear thinkers, and not wishfulthinking politicians. The world will return to sound economics and abandon new era economies, unorthodox economies, theory economics, and social credit. Live within the income must lie the slogan of people and governments.