The Daily News. FRIDAY, AUGUST 1, 1919. DANGER AHEAD.

Taranaki Daily News, 1 August 1919, Page 4

The Daily News. FRIDAY, AUGUST 1, 1919. DANGER AHEAD.

The warning issued by King George in his recent speech at the Guildhall is opportune. He urged the utmost private and public economy, the best use of national resources, and unremitting industry. This has been followed by a striking statement by that wellknown and sagacious Labor leader, Mr. Thomas, M.P., who has just returned from a visit to America, where he has seen things that have opened his eyes to the imminent danger before Britain unless her people soon alter their outlook and ways. Mr. Thomas, who cannot be accused of siding with "capitalism," vehemently declared; "We are drifting headlong to ruin." America, he said, was I gigantically preparing to capture I British trade, the British sovereign was steadily depreciating, and America ivould soon be able to hold the Empire to ransom. That it is the plain, unvarnished truth Mr. Thomas utters is obvious to anyone who has followed the trend of things at Home of late. The mines hold-up is typical of what has been going on. It was*one of the most wanton and wicked industrial crimes ever committed by misguided and unreasoning men, Who attempted to bludgeon the country into adopting a course favored by them, without reference to the wishes of the representatives of the people in Parliament. Direct action is the antithesis of constitutional government. Persisted in, Parliament may as well shut up shop. That would lead to a reign of anarchy, and bring about economic disaster. In the end the workers would suffer as much as any other class—perhaps more so. Just now Britain —which has just emerged from the greatest ordeal she has ever experienced, with the savings of centuries dissipated, with her whole economic system impoverished by four and a half years "of terrible war, with a great proportion of her ships sunk, with her old markets being eagerly seized by her competitors—wants, more than anything else, industrial peace, and concentration on production. Industrial war may very easily bring about her collapse. There is no excuse for the action of the extremists, for they have before them the tragic lesson of Russia, which is in a state of ruin —morally, physically and economically. It is to be hoped they will pay heed to the warning of their own leader, though in the coal, trouble the extremists took absolute charge and ignored entirely the executive, who appeared incapable of exercising any restraining influence. Apart from direct action, however, there is. still the great danger to the economic well-being of the nation arising from the limitation of output. To-day the American workman is producing three to four times as much as the British workman, who foolishly thinks that limitation of output is to the advantage of his class, leading to more employment. The very opposite is the case. Cheapening of cost increases purchasing power, which automatically leads to greater consumption, thus creating more employment. Conversely, the greater the cost, the less the consumption, and the less the employment; - In the Edinburgh Review for April, Sir Lynden Macassey writes on "Economic Fallacy in Industry." After 'dealing with the various misuader-

standings surrounding the division of the profits of industry and giving some illuminating examples of the working of that most dangerous and widespread fallacy, the assumed advantage of restricting output, the writer shows that the proposition that the prosperity of the country depends upon production in the country obtains no credence whatsoever, being generally treated by working men as a sheer irrelevance. Actually, of course, the whole-hearted acceptance of this proposition is one of the vital necessities of the moment, for no juggling with wages or with profits will permanently enable the people of any nation to enjoy or consume to a greater value than that of their production. Unfortunately the position is obscured i to the ordinary consumer or wageearner because Britain is still pledging the future by importing large quantities of goods against credit, instead of paying for them with other goods or with services. The depreciation of Britain's currency also accentuates the illusion of prosperity, and in this connection Sir Lynden states that "The effect on prices of the inflation of the currency is wholly disregarded by workpeople. It is very necessary that it should be' explained and understood. The wildest views have been expounded to the writer in some advanced centres. It has even been said, 'lf there are not sufficient profits in industry to pay us the wages we ask, then all the Government has to do is to create the necessary paper money and use that!' Such proposals have been solemnly advanced by perfectly honest men who obviously believed in their soundness. They said that it was merely the desire | of the Government to back up the capitalists that prevented adoption of the remedy. That such views should be accepted by any substantial body of workpeople is a serious menace to national prosperity." Mr. Thomas was in no way exaggerating when he said that "America will soon be in a position to hold the Empire to ransom, unless Britain buckles to and produces vast quantities of manufactures at cheap prices." That is the plain position. The exchange rate is an accurate, index. Its movements affect us in the colonies in our trading with America, just as they do the Old Country herself. To-day the American dollar is worth 4s 6Jd of British money. Before the war it was worth slightly less than 4s 2d. In other words, we have to provide £1 2s 8d where formerly we provided £l. There is only one satisfactory way of improving our credit, and that is by increased production. It will enable her to become independent of America, and rehabilitate the exchange rate. It will also enable her to solve her economic and financial problems. Economy and production must go hand in hand if Britain is to weather the storm. "With all pulling together it will take the Old Country all her time to do so, so terrible have been the ravages of war. With industrial sections holding up industry to gain their own selfish ends without regard for the welfare of the nation the task will be impossible.