"Taranaki Central Press” TUESDAY, MAY 4, 1937. BOOM AND SLUMP.

Taranaki Central Press, Volume IV, Issue 424, 4 May 1937, Page 4

"Taranaki Central Press” TUESDAY, MAY 4, 1937. BOOM AND SLUMP.

“There is still a rather helpless feeling of fatalism about the recurrence of boom and slump,’ said Sir Josiah Stamp, speaking on “Loans and Taxes for Booms and Slumps,” at a luncheon in Leicester, England. Elaborate analysis had indicated, he said, that the sequence of boom and slump in extreme fluctuations was due partly to delays or defects in the monetary mechanism and partly to collective psychology, errors of judgment, too much aggregate pessimism or optimism. In an individual capitalistic system this was about fifty-fifty. The turning point between boom and slump was marked by overconfident production for the maiket, by the failure of individuals to realise the aggregate supply at a certain stage,in relation to demand. Some laid great stress on variations in the rate of interest, particularly as affecting stocks held on borrowed money; others stressed the quantity of credit available. Others, again, thought the “compensating factor” could be the programme of works by public bodies, to be put to a maximum when ordinary business was at a low point. But public works expenditure had no precise value unless the proportion borne between taxes and loans were also determined and adjusted. For the Government to absorb by direct taxation what otherwise would go into excess saving, and to expend it freely, was a corrective at one point. But taking in the form of taxes what ordinarily would be spent by the taxpayer was redistributing the purchasing power and not adding to it.