ECONOMIC WAR

Wairarapa Times-Age, 6 February 1940, Page 5

ECONOMIC WAR

BRITAIN’S GROWING STRENGTH CONTROL OF RETAIL PRICES. THREE MAJOR PROBLEMS. Economic factors in the war, and Britain’s latest measures to ensure their smooth working were dealt with by Mr H. V. Hodson, editor of the "Round Table.” in a talk broadcast by Daventry. “Of course the war can only be won in the end by fighting men,” he said. “We can’t gain victory by economic measures and propaganda alone; but, behind its armed forces, the whole of the nation’s economic effort is growing in strength.” With what object was Britain turning her resources of labour, capital and skill to the forces necessary for the prosecution of the war? In the first place, said Mr Hodson, it was necessary to supply the armed forces with food, clothing, munitions and transport; also to keep the nation healthy and strong, even if this meant going without luxuries and comfort.

'■'Some of our wartime needs can be supplied at home, but usually only by going without other things which in peacetime are made by the same capital and labour. Some of our wartime needs must also be supplied from overseas.

“But our imports must be paid for by exports. For Britain in wartime there is a third economic problem just as vital as maintaining exports and maintaining home production —the problem of shipping.

"In lhe past week we have had news of Government action to meet these three problems. The first is how best to dispose our economic resources to maintain the strength of the nation. It has been announced by the Treasury that £1,000,000 a week is to be spent to control the retail prices of staple foods. An official committee is also to investigate the price of clothing. “This control of food prices does two things. It holds back the vicious spiral of wages rising because the cost of living rises, and lhe cost of living rising because wages increase and prices follow suit.

“It cannot prevent rises in wartime, which are inevitable, but it does concentrate the rise on uncontrollable and non-essential goods. It also helps to equalise real income by taking purchasing power from the general taxpayer and giving it to people who spend a higher proportion of their total incomes than do the rich on bread, meat and staple foodstuffs. "Rationing also has an equalising effect and tends to keep prices steady, but there is no sense in rationing bread, of which there is plenty for everybody.

“So the new move means that we are keeping up the consumption of staple goods, which is needed for national health and strength, and keeping down the consumption of unessential luxuries. That problem shows how closely are linked the two sides of economics—money and trade.” This link was a strong argument against the creation of a Minister of Economics in the War Cabinet, which had been refused by the Prime Minister in favour of an Export Council, the object of which was to help British industry to sell abroad to enable her to buy more and more of the goods needed to win the war.

“While we are trading freely all over the world—our export trade is rising— Germany is existing with a trickle of trade with her Continental neighbours. She has tried to stop us with bombs, mines and torpedoes, but without success.

“Of course there will always be small losses of merchant ships which we must make good. At the same time the Navy is building warships faster than ever. In order to do away' with competition between these two shipbuilding services, which are really complementary, the Admiralty' has taken charge of merchant ship and naval shipbuilding, and even repairs. “This is the third important and encouraging piece of news from the economic front in the past few days.”