PROFITEERING

New Zealand Times, Volume XLVI, Issue 10604, 1 June 1920, Page 6

PROFITEERING

QUESTION OF THE HOUR HOW PROFITEERS ARE PRODUCED. THE REMEDY OF CO-OPERATION. (By Sir John Findlay, K.C., LL.D.) Article No. 3. During the war every Government, including the British practiced from necessity or shortsightedness overincreasing inflation of their currencies. Even since the war closed the same practice has been continued. But Governments, by their legislation, regulations, and -prosecutions, have sought to direct on to tho class known as "profiteers" the blindfold popular indignation, largely created by the unseen operations of vicious inflation.

"Profiteers" are, broadly speaking, the trading class of capitalists- If prices largely due to continuous inflation are continually rising, every trader who has purchased stocks in any considerable quantity, inevitably makes high profits if he sells at the prevailing market price. Thus, in large measure profiteers are a consequence, and not a cause, of rising prices. The process threatens the social and economic order of the nineteenth century. But so far no definite or effective plan has been devised for staying the evil. The report last year of the Cunliffe Commission showed to what a great extent British currency has been inflated.

In Russia and Austria-Hungary the process has reached a point where at least for the purposes of foreign trade the currency is practically valueless. The German mark is worth less than 2d on exchanges. The currency of Italy and France has fallen in value enormously. Having debauched their currency, these Governments and others seek to allay popular indignation by fixing prices for commodities. But the presentation of a spurious value for the currency by force of law expressed in the regulation of prices contains in itself the seeds of final economic decay, and soon drtos up the sources of ultimate supply. If a man is compelloi to- exchange his goods or the fruits of his labour for paper, which experience teaches him he cannot use, to purchase what he requires at a price comparable to that which he has received for his own products, he will not deal in the goods in question or he will keep his produce for himself or dispose of it on a wasteful and inefficient system of barter, or greatly relax his efforts in produotion.

But if a Government refrains from regulation and allows matters to take their course, essential commodities soon obtain a level out of the roach of all but the rich, the effect of tho vicious inflation becomes apparent, and the fraud it perpetrates upon the public can bo concealed no longer. These disastrous results are seen everywhere in Central Europe, to a large degree in Britain, and to some considerable extent in New Zealand. The effect on foreign trade of price regulation and profiteer-hunting, as cures for inflation, are even worse; for the currency of a country soon reiches its real level abroad, and the purchasing power abroad of these inflated currencies rapidly falls towards zero. To further illustrate these results, some striking examples may be taken. The note circulation of Ger-' many is w.bout ten times what it was before tho war, and the value of the mark in terms of gold about oneeighth of its former value. Hence imported commodities are beyond the purchasing power of the great mass of the German people, and when the blockade was raised the flood of imports which might have been expected became commercially impossible. "With currency in suoh a state, business loses its genuine character, and becomes no better than a speculation in exchanges, the fluctuations of which entirely obliterate the normal profits of commerce. The note circulation of France is more than six times its pre-war level, and tho exchange value of the frano in terms of gold has fallen "enormously. In Italy the note circulation is five or six times as great as before tho war, with consequences similar to those just mentioned. Tho menace of inflationism has not been confined to the period of the war. It is a continuing phenomenon of which tho end is n.ot yet in sight. The evils of the breakdown of tho productive system of Central Europe and the evils of inflationism have produced an inefficient, unemployed, disorganised Europe, torn by internal strife and international hate, fighting, starving and pillaging'. No wonder Mr A. Gardiner wrote this week from Berlin to a leading London newspaper that if the Spa Conference does not stop international dissolution Germany will become a corpse which will poison the world. All this spells enormously reduced production, which is making itself felt universally, and this reduced production, added to the evils of inflationism, accounts for high and ever higher prices and for their product—the Profiteer. In this and previous article. 3 I have been mainly concerned with presenting to you renders Mr Keyno's views of tho economic consequences of tho war, where they touch the deeper causes of profiteering. In doing this I hate, as far a« that purpose was assisted theroby, largely used his words, arguments, and conclusions. Tho evils I have discussed no ono will deny tho existence of. What, then, of practicable remedies? The I two main remedies have already been : indicated. 1. International reorganisation must bo devised on a basis which will work for .the benefit of each of the family of nations, so that by co-operation the greatest amount of wealth may bo won from Nature and tho greatest amount of wealth added to the earth's products by industry, skill, and science of man. , 2. The currencies of the world must be deflated to the extent necessary to give a maximum stability to prices, and at the same time discharge all tho proper functions of a currency. But, beyond these two remedies lies tho need of new economic motives, methods, and ideals. Those of tho nineteenth century no longer satisfy our desired standards of industrial eft ficioncy and distributive justice. This need not involve the pangs of a new industrial birth if all classes of tho community can ho brought to feel and show a larger trust in each other and approach our social and industrial problems in a spirit of mutual concession and co-oporntion. The day of lassioz-faire is over,

but that does not mean that truo and beneficial comprehension is to disappear. We are told that we as'o all members of an industrial commonwealth. To make this a true statement our national industrial forces and energies must be organised and co-ordinated under some collects e control.

In the'past the system has been a chaotio and anarchic struggle of individual and group against other individuals and other groups, the aim being to get as much as possible for each and yield as little as possible to others. Commercialism shuts out tho aspect of social service. This system cannot continue. It stands condemned deep down oven in the hearts of those it benefits most, for iir is antisocial and the social conscience has developed to the point of power, motive purpose, and articulation. We yntist realise that we are all in the service of each other, and that tho whole field of industry must bo based on social sendee, and tho rewards of men in some way fixed accordingly. John Stuart Mill, whoso outlook on social life expanded as he neared his end, gravitated in his later years to a strong and still stronger belief in widespread co-operation. He says: ''The social problem of the future I consider to be how to unite the greatest individual liberty of action with a common ownership in the raw material of tho world and an equal participation of all in the benefits of combined labour. Education, habit, and cultivation of the sentiments will make a common man dig or weave for his country'as readily as he will fight for his country."

I have grave misgivings an to tho so'indnpsp of this r>ro pntria devotion. Our belief in the unselfishness of human nature varies with our 3'ears and our experience. I desire to avoid cynicism and optimism, but too oftcm our schemes of progress proceed on tho assumption that human nature can be moulded by the.?© schemes as butter can be moulded by a wooden print. Mr Balfour has written that real and stable progress is - a slow growth of a widespread sentiment of which our policies and progress are but the expression, and- that no radical chances in our system are permanently possible until based upon such a sentiment. Selfishness is by far the most constant, if not tho most powerful, of human motives. It may be subdued and overcome in many instances, but its force has tho persistency of the pull of gravitation. The profoundest students of history and of national developments have asserted that tlic growth of intelligence in a people docs not lessen, tho power of individual self-interest, and that as the. individual life comes more and more under the dominion of tho intellectual will the instinctive impulses which make for the good and tho morality of nations becomo controlled and often subordinated to calculations of individual pleasure and, advantage. "Hide your silver spoons from the man who assures you that he finds honesty the best policy/' said old, Dr Johnson, and virtue based upon calculations of expediency never rings quite true. These observations may seem irrelevant, but so far as they remind my readers that no changes in political or social creeds arci of much, use without a change in the collective heart, they suggest the real test of any proposed social remedies. In my judgment tho great remedy for tho evils of the existing industrial system ia genuine and willing co-operation. Would such a co-operation chime with tho sentiments of the great mass of tho workers in the English-speaking world to-day? If so, well. If not, it is useless to try it. As Mr Hobhouse points out, if we substitute co-operation for the present unregulated competition, wo are.introducing a new and desirable principlo into industry. If to-day employers and employed in any trade are performing* a social service it is largely unconsciously social. For them the one thing needful is to And sufficient purchasers, and the true commercial spirit cares little for tho destiny or usefulness of tho commodity once a salo is made. It is wages and profits and not social ser.vice that are paramount ends. The reform needed is a quite different method of producing wealth. We want a new spirit in oconcmics—the spirit of mutual help—the sense of a common good. Wo want each man to feel that his! daily work is a service to his kind and that idleness or antisocial work or actions are a disgrace. The Labour movement itself consciously or unconsciously is leading to the principle of the collective control of industry by the community— not the State—in the interests of all its memberg. If slowly and little perceived, yet steadily social sentiment is seeking to replace the present anarchic system of competition and the forces of,individual self-interest as tho -arbiters of industry, by a deliberate systematic arrangement of labour and commerce in the best interests of society as a whole. The true principle of tho collective control of industry means a control not exercised bv the State, but yet in tli9 iuterestis of. the whole nation.

This topic is tufty discussed in Professor Hobhouso's work in "The Labour Movement." In this connection I see great promise in the proposals Mr F. G. Dalziell has made in these columns for a great industrial conference, and in the formulation of schemes whereby p rinse eo-oporation ia established between Capital and Labour on the basis of Labour (including management) taking the wholo. value of the product of our industries, after due provision is made for reserves and for payment of a reasonable rate of interest. . But beyond this the industries should bo grouped according to their nature, and a. council, representing all the groups appointed to confer as to what are to be the reasonable rates of profit to be allowed to each group in fairness both to the workers and the community. „ ~ . A full development of tins proposal will eliminate waste, increase efficiiency and production, settle industrial unrest, and make the profiteer a nightmare of the past. It is to he hoped that the Prime Minister will call and give every encouragement to such a conference. [Concluded.]