NORMAL SPENDING

Rotorua Morning Post, Volume 2, Issue 282, 23 July 1932, Page 4

NORMAL SPENDING

The impression that world affairs are taking a turn for the j better is steadily gaining ground | and has recently been confirmed ! by many responsible public men. Mr. Stanley Baldwin is the latest to encourage the first timid ret. vival of public confidenee, wbile ■.New Zealand's Prime Minister has recently introduced a much more optimistic note into his public utterances. For all that, prosperity is slow in coming. Why does it tarry? There are several good reasons which anyone of us could name but as private individuals we can do little to alter most of them. Against one cause of depression's lingering, however, we can take immediate and effective action. This cause is stated in the general complaint, "People are not spending." It is we ourselves j who are putting off prosperity. 1 Economy in private spending is ! being overdone. It is right and | proper that people should reduce expenditure in order to avoid bankruptcy or destitution. But where they have reasonable security, sound reserves and a fair margin of income, they can help to resolve the crisis by wise spending. On the other hand, if j they skimp unnecessarily, they imperil the whole economic fabj ric, and their own position and . savings may collapse along with j it. The subject has been keenly j debated hoth in Great Britain j and the United States. One of the most sensible contributions was supplied by the trustees of a savings bank. "If you have a surplus above all likely needs," they advised their depositors, "make careful purchases of things you want for permanent use while prices remain low." ; And they went on to particularise. "See that your home is put : in good repair. Do not let your i automobile or any other property get Tun down'!" So the story went on. Buy clothing, buy real estate at a time when there are bargains. Wise spending at the right time is as much a part of good thrift as saving all you can when prices are going up. The effect, the trustees concluded, would help to set the wheels of industry turning more rapidly and restore employment to thousands now out of work. In short, instead of putting ofi: prosperity by parsimony, people can do much to accelerate its return by normal spending. Early last month the subject crept into the columns of The Times. Strangely enough, it was the arch-enemy of public waste and extravagance, Sir Ernest Benn, who started the controversy. Speaking at a meeting in London of the Friends of Economy, Sir Ernest suggested that "if we could achieve public economy and liberal private expenditure we should soon again be back on the road to prosperity." Naturally the Socialists turned to rend him but he had strong supporters, including such influential names as those of Sir Arthur Salter and Professor Pigou. In reply Sir Ernest Benn spoke of "the danger to industrial and commercial well-being from a false application of economy in public affairs to the very different realm of private affairs." He remarked that while the campaign had made little progress in securing public economy it had spread the notion of economy among the people with distressing effects on home trade. In closing the argument The Times said the key to the differences expressed lay in the distinction between different kinds of expenditure. Wise spending was always good and should never be discoui aged. These arguments and conclusions apply closely to New Zealand conditions. Many ■ people and institutions, although possessed .of ample margins, are practising thrift and retrenchment to excess. Until individuals have started spending normally, conditions generally cannot become normal. They are simply putting off prosperity.