The Daily News. MONDAY, MAY 30, 1621. THE PROBLEM OF REHABILITATION.

Taranaki Daily News, 30 May 1921, Page 4

The Daily News. MONDAY, MAY 30, 1621. THE PROBLEM OF REHABILITATION.

Some conception of the magnitude of the task of the British Government can be gleaned from the fact that apart from the money required to be raised by taxation for the ordinary supply services, there has to be provided at least four hundred and sixty-five million sterling to meet debt charges. This means that out of every shilling raised by the Treasury from the people very nearly one-half represents a dead loss year by year. As everyone knows, there is a limit to the ability of the people as regards taxation, a limit that is governed by their earning power. The lessening of production, trade depression, unemployment, industrial troubles and other factors have a marked effect in reducing this earning power; hence a falling national revenue. It is one of the peculiarities of an economic crisis of this nature that the only practical remedy consists of still further reducing the national revenue by lowering the taxation. To enable this course to be adopted there must be retrenchment in departmental expenditure. The British Government has now been thoroughly aroused to its duty in this respect, the result being that the Treasury has issued, a circular to all the State departments demanding reductions amounting to twenty per cent, of the amount of the estimates for 1921-22, whereby a saving of one hundred and thirteen millions is expected to be effected. The drastic nature of this measure is fully justified by the critical financial position of the country. This action is in striking contrast with that taken by the New Zealand Government in appointing certain departmental officers to merely inquire into the matter of retrenchment. The British method is stern and uncompromising. It demands a definite reduction, and that is the only effective way to deal with the matter. The only alternative to retrenchment is (further borrowing (which intensifies the existing evil), or raising the taxes (which would seriously hamper the recovery of industry and commerce, and be bitterly opposed by the people, who are already bearing heavier burdens than was ever thought possible for them to carry). The circular stresses the fact that a reduction of taxation and indebtedness, as rapidly as possible, is required to maintain and stimulate industry and commerce, as well- as to Secure full employment. It is worthy of note that the same problem is being dealt with by the United States Cabinet at the present time- the President being anxious to find a road to the financial rehabilitation of the country’s affairs. The Cabinet, it is said,, is considering tremendous plans for reducing the United States’ debt and the Allied debt, and is conferring with financial, industrial, business and other magnates, with the object of solving this world-wide problem—a course that might with advantage be taken by every Government. affected by the late war. Meanwhile a serious note of warning has been given by the London Daily Express as to the result of what is described as the foolish blundet by Britain of insisting on cash payments by Germany instead of material payments, thus forcing Germany to double - her exports and emerge the industrial victor. The question is one that has two sides, but that it will seriously affect the Empire’s trade is beyond doubt. This emphasises

the need for retrenchment as a means for rehabilitation, and makes the process imperative, placing it above all political and other petty considerations; otherwise the foundations of our whole financial and economic structure may be shaken.