11 FEBRUARY 1928, Page 30

Finance—Public and Private

• Paying the Price

hvEavrIUNG-viorth having—rat. alLeVents,,in _the world of material things—has its price. Good things have to be paid -for.- Paobahly one-half of -our social -and industrial troubleS of to-day are due to a _desire to obtain the good things but not to pay the price. It was a very ancient and a .very, wise writer who .said " The desire of the slothful killeth him ; for his hands refuse to labour." In other. words, there is the deSire to possess without the intent to make payment.

. . LLOYDS BANK MEETING. One is irresistibly reminded of these elementary though- fundamental truths by studying two very different pronouncements concerning the economic situation in this country which have appeared during the past week. In a book entitled The Flaw in the Economic System, Mr. J. Taylor Peddle expounds at considerable length a theory that most of our industrial troubles of to-day are directly traceable to our return to the Gold Standard, or, at all events, to that event combined with the monetary system and policy accompanying it. Next week I shall hope to deal more fully with Mr. Peddie's book, but I want this week to refer to the other and very different pronouncement, namely, that contained in the speech of the Deputy Chairman of Lloyds Bank, Sir Austin Harris, at the annual meeting of the bank held last week. So far from agreeing with Mr. Peddie's complaint concern- ing the Gold Standard, Sir Austin Harris, speaking as a business man and practical banker, paid a tribute both to the policy of returning to the Gold Standard and to the monetary policy as inspired and carried through by the Bank of England. Sir Austin said :— _ " By a wise and sympathetic understanding of the credit require. ments of the moment, the Bank of England has steered a safe course between the whirlpools of monetary inflation and credit restriction ; disturbances due to the movement of gold have been minimized, a much steadier level of prices has been maintained, and it is evident from the increased supply of bank money during recent months that the signs and requirements of a revival in trade have not been overlooked."


It is not, however, because of this tribute either to .the Gold Standard or to the Bank of England that I wish to draw attention to Sir Austin Harris's very admirable speech, but because, as it seems to me—and I fancy that not a few readers of the. Spectator will agree---he laid down a principle which, if it were only more clearly recognized, would go far to bring about a better state of things in our great industries. Like previous speakers at the bank meetings, Sir Austin Harris added his testimony to those who had declared that signs are discernible of some turn in the tide of trade. As in the case of the speeches of other bank Chairmen, however, the newspapers have, for the most part, freely quoted all references to the small but welcome signs of improving trade, to the neglect of what surely must be regarded as the most important part of the remarks of the Deputy Chairman of Lloyds Bank.


It is no easy task for a bank Chairman to express publicly his views upon the economic situation. So long as there is nothing but praise to bestow all may be well, but if there should be a word criticizing National Expenditure he is sometimes accused of making a political speech. If there are defects in hilliness organization which are pointed out, then the speech is held up as one calculated to impair industrial recovery. Or, if a word should be uttered against trade-union restrictions as a drag upon trade, then, of -course, it is a case of the " Capitalist versus the masses." All this may be very natural, but is rather regrettable in this land of free speech, for unquestionably there can be no progress until imperfections are faithfully pointed out and, where possible, removed. : THE LAW. OF COMPENSATION.

an -very carefully " chosen- words,- however, Sir Austin Harris accompanied his recognition off-a small- improve- ment in The trade position with important qualifying remarks. He said that he had been very much struck 'with figures compiled by the International Labour Office of the League of Nations. In four important industries the money wages paid in various cities of the world, cal- culated on the basis of a forty-eight hour week, have been ascertained, and after allowances for the cost of living have been made, index numbers of comparative real wages have been compiled. These, said Sir Austin Harris, show the following results : " London, 100 ; Berlin, 6)7 ; Paris, 53 ; Milan, 52." The index numbers are subject to certain reservations, no account being taken of any household expenditure apart from food, but nevertheless they indicate a distinctly higher level of real wages in this country than in Continental States. Commenting upon them, Sir Austin said :- " A higher standard of living and comfort is something we are rightly striving for and have in a certain measure secured. There can be no doubt that a cheerful and contented worker, able to spend his leisure in the healthful recreation of mind and body, is a better citizen than one who nurses the suspicion that the good things of life are unjustly withheld from him. But there is one all-important proviso—we must be prepared to pay for benefits received. We are ruled by an inevitable law of compensation in this matter, and a higher standard of comfort must be paid for either out of income or out of capital. By payment out of income I mean by harder work all round, by closer co-operation between employer and employee, by the removal of unnecessary and vexatious restrictions; and by any reorganization - that may be necessary to promote economy and efficiency. Benefits secured in this way pay for them- selves and will therefore be lasting. By payment out of capital I mean payment through the medium of the dole, high taxation, un- employment, the ruin of businesses and the destruction of the capital employed in them. This way leads inevitably to the for- feiture of the very benefits for which we have paid so heavy a price."


In these carefully chosen words Sir Austin Harris may be said to have summed UP a matter which constitutes the crux of our economic and social problems of to-day. During the War we professed to be conscious-of the great economic struggle which the post-War years would bring. Nevertheless, from the. famous election of 1913 onwards political rather than economic reasoning was followed. Certain increased standards of living and of comfort, as expressed not merely in Wages but in hours, Methods of working and so forth, were to be regarded as in the nature of the laws of the Medes and Persians—whatever hap- pened; their demands were unalterable. The change in our economic status, our liabilities abroad, the growth in foreign competition, could only be considered in so far as they did not interfere with the edicts of the Medes and- Persians. Nor must it be understood that by Medes and Persians I am merely referring to trade unions and the workers. Individualist tendencies, defective organization and, in some instances, obsolete plant, were also regarded by certain- groups of Capitalists as something wholly un- alterable, while successive Governments, in their failure to economize and in their zeal for unproductive (except, perhaps, politically) expenditure, have also completely failed to recognize the requirements of the situation and to give the necessary lead in the right direction.

In fact, while from the highest to the lowest there may have been the desire for the return of prosperity, the readiness to comply with the conditions—in other words, to pay the price—has been lacking. Quack nostrums, both political and financial, have been popular and have sold well, but old-fashioned, simpler, but more effective remedies have been despised. Sir Austin Harris's remarks come as a timely reminder of fundamental facts and