PROFITEERING

New Zealand Times, Volume XLVI, Issue 10603, 31 May 1920, Page 4

PROFITEERING

QUESTION OF THE HOUR PRE-WAR INTERNATIONAL OR OPERATION. INFLATED CURRENCY AND PROS FITEERS. (By Sir John Findlay, K.C., LL.D.) Article No. 3. Before the war the international ofl ganisation and co-operation oj Austria-Hungary, Germany and Rus* sia was most elaborate and widespread. The various currencies were all maintained on a stable basis in the * relation of gold and to one another. This facilitated the easy flow of ital and trade to an enormous extent. It was this international organisation of that vast mechanism of transport, coal distribution and foreign trade which made possible the industrial order and standard of life secured in the dense urban centres of the new population. This stands out in clearer view, now that the war and its results have reduced that organisation and ordei; to chaos.

Long ago Malbhus taught that tho fertility of the race would, in the absence of fundamental checks, outstrip the means of subsistence, but the progress o£ machinery, the sources of tha new world, the ever-improving organisation and co-operation among nations* have delayed the arrival of the day he predicted. Half a century ago it waa supposed it would never come, but the war, with tho havoc it has played with tho means by which that day waa delayed, reveals ifalthus’s law; at tha present time in. Central Europe, at any rate, in a grim light. The terms of the Peace Treaty, i£ enforced, even in main part, will intensely increase the destruction of tha economic life of Central Europe, whose disintegration and starvation, seem now almost inevitable.

This opnclusion becomes clearer when we remember that Europe consists of the densest population in the history, of the world. Europe cannot feed itself. Internally the population is not evenly distributedr—much of it is crowded onto a relatively small numbei of dense industrial centres.

This population secured for itself a livelihood _ before the -war without much margin of surplus by means of a delicate complicated] organisation* the foundations of which have been destroyed. In these circumstances the decrease! in. the productivity of Central Eiuropfi is, and will be enormous. For instance, the coal production of Europe as a whole is l estimated as having fallen on by 30 per cent., and upon_ coal tha greater part of the industries of Europe and the’ whole of her transport system depend. Whereas before the war Germany produced 85 per cent, of tho total food consumed by her inhabitants, the productivity of the soil owing to its exhaustion from lack of tho usual applications of artificial manures .throughout the course of the war, is now diminished by 40 per cent,, and the effective quality of her live stock by 55 per cent. . . . ~,, Similar figures can ho stated wxta respect to the plight of Russia and Austria. According to Mr Hoover "a rough estimate would indicate that the population of Europe is at least 100,000, » 000 greater than can bo supported ■without imports, and must ( live, if 3d all, by tho production and distribution of exports-” , . .a Now in contemplating tho chances ov increased production of commodities, all the facts above stated’ must bo taken into consideration. The twoi main causes of high prices are (1) Reduced production. (2) Inflated currency.

In forecasting, therefore, the trend of prices, it is important to ascertain' wbafc the prospects ore of increased production generally. The condition of Europe to-day, including the great relaxation of effort which Mr Hoover says is the reflex of physical exhaustion of large sections of the population from privation, and the mental , and physical strain, of the war, does not encourage much hope of increased production for some years to come, and then only if an elaborate international* industrial, and commercial organisation is established, and that achievement in the present mood of the re. cent belligerents is a distant, if even a probable prospect. But high prices, have a second great cause; namely, tho , inflations and debauchery of tho world’s currency that Igive taken place since the war began. The more abundant the currency of all kinds, including bank credits, the dearer are commodities, unless the quantity of these commodities increase in duo proportion. Lenin is reported to have declared that the best way to destroy the capitalist system was to debauch the currency.

By a continuing process of inflation. Governments can confiscate secretly and unobserved an important port of the wealth of their citizens. By thia method they not only confiscate hut they confiscate arbitrarily; and while the process impoverishes many it actually enriches some. The right of this arbitrary rearrangement of riches strikes not only at security hut _at confidence in the equity of the existing distribution of wealth. Thos© to -whom the system brings windfalls beyond their deserts and cydn beyond their expectations or desires become “Profiteers,” who are the object of iho hatred of all classes of the comnmnity which, the inflationism has- impoverished. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors which form the ultimate foundation of capitalism become so utterly disordered as to ha olmost meaningless; and the process of -wealth-getting degenerates into n gamble and a lottery. There is no subtler, no surer meand of overturning the existing basis of society than to debauch the currency. Tlio process engages all the hidden forces of economic law on tho side of destruction, and does_ it in a manner which not. one man in a thousand itf able to diagnose. (To bo continued.) j In the article on ‘'Profiteering’’ by Sir John Eindlay published in Saturday’s “Times” a sentence should have read as follows: —“For some day, when the accumulations were great enough, the millennium would arrive, and overwork, overcrowding, and under-feeding would coma to an end.”