16 AUGUST 1930, Page 6

The Psychol ogy of Trade

THE primary needs of men considered as animals are constant. The induced and educed needs of men are without limit and are always increasing. Civilization is always demanding more material for comfort, culture and amusement. This ever-growing demand, as expressed at any particular moment and met by supply is the trade of that moment.

If through physical and mental activity the insatiable desires of men become effective, there is a great demand for satisfactions. If through that same activity there is a corresponding enterprise in supplying satisfactions, needs are met liberally if not completely, and trade is good. The degree of effectiveness of these two ifs obviously depends on a third, and that is, if the devised and known means of production and exchange are com- mensurate with the if of demand and the if of supply.

The third of these ifs is, of course, a determining factor. As long as men did not know how to produce goods freely, no amount of desire for goods could be effective in trade. That factor no longer troubles us, for science has afforded a host of productive inventions and such admirable means of transport that wealth can be produced and brought to market with amazing facility. If powers of production went no further we should not greatly miss the lack of further invention, although further invention is bound to come.

It is unfortunately otherwise with the means of ex- change. Man's best invention in this regard is a poor thing, amounting to reliance upon a gold standard for exchange references. It is not a scientific standard, but one which has been adopted because it " works " in relation to human psychology, which is extraordinarily sensitive and unstable in matters of credit. We are all children as yet in this matter of exchange. So, periodic ally, production runs ahead of consumption, although

the 2,000 million people of the world stand for 2,000 million units of insatiable need.

We see a world betrayed by its exchange system, or rather by its lack of a really effective exchange system. Britain is part of that world, and the storm of depression necessarily effects her greatly because she is so great a world dealer. Very serious effects upon British mentality are discernible. Too many people entertain the impression that Britain is coming to the end of her resources, that our trade future is behind us, that we have more mouths than our economy can feed, and that we face national decline.

It is necessary to combat this mentality, because nothing fails like failure. If our people are brought to believe that their day is done, they will cease to be enterprising ; they will cease to reach out like their forefathers to the ends of the earth for the satisfaction of their needs. They will pull down British trade by the simple process of ceasing to trade. Falsely believing that trade is a definite volume of transactions in which their share must necessarily be less, they will limit trade and employment through lack of a proper ambition.

Trade, we must repeat, is not a thing of definite volume. Trade is created by those who trade, increased by those who strive, decreased by those who falter. When all allowance is made for the imperfections of the exchange instrument, we can do much more or much less with it, as the spirit moves or fails to move us. There is really nothing to be afraid of. Britain is still the most favoured workshop in the world. It is still, taking everything into consideration, a natural Super- Power Area of unsurpassed possibilities. If men cannot make a good living here, there is no other place in the world where a good living can be made. . With this conviction, it is within our powers to achieve a much greater national income and a much higher standard of living. If we have not this conviction, our efforts will be cramped by depression, our unemployed will drift into permanent incapacity, and we shall lose not only the more we might have, but much of what we have gained in the past.

It would be well if politicians in pursuit of particular ideas were to cease working upon the psychology of depression, and I welcome one or two signs that this is being borne in upon the proprietors of our popular newspapers. I do not much enjoy recounting the misfortunes of other nations, for it would be both ill-natured and stupid to do so. The world is so closely linked up in modern commerce that the misfortunes of even such a small group as the six million people of Australia react upon the world economy. It is, however, instructive to point out that this world depression from which we arc suffering did not originate here, but in places abroad, and that the crash in the United States last year was one of the chief causes of that bad trade psychology which is affecting all the world and which is so marked a symptom here.

There are no general American unemployment statistics available, but it is significant that America has a National Unemployment League whose. officials give us an estimate of six million unemployed, which, in view of the very large proportion of the American people who are still working on the land, is a figure even more serious than ours. I see no reason to disbelieve this estimate, because of the light thrown on the subject by figures of output. For example, take the building permits of New York State and consider these amazing variations : BUILDING PERMITS ISSUED IN TWENTY-THREE CITIES OF NEW YORK STATE.

First five Million months of dollars.

1930 .. .. 202 1929 .. .. 713 1928 ..

What becomes of American employment in the building trade when subjected to such staggering variations as these ? There was actually less than one-third the amount of employment in the building trade in the first five months of this year that there was in the corresponding period of last year !

Germany also is suffering terribly, 1,850,000 persons being in receipt of special relief, and that although her employment is partly sustained by forced reparation exports, earning wage payments which are really lent

to Germany. So Britain, America and Germany, the three most favoured power countries in the world, arc all badly hit. France and Italy, on the other hand, have been saved from the worst of the depression by pursuing far-reaching plans of national reconstruction which in each case have given a great impetus to national economy. At the moment Italy, although having only sonic 300,000 unemployed, is putting in hand fresh schemes of a fruitful character, I observe with interest that a well-equipped Fascist critic of the British position wonders at a psy- chology which prevents us front taking energetic step; to deal with waste land, to develop an a II-eleetrieal system of industry and to employ the greatest empire in the world to better advantage. We may hate dictator- ship, but who can help admiring the Fascist psychology ? Italy is naturally a rely poor power country, but Musso- lini is making the most of it. As I write, the post brings me news of the irrigation of a further 220.090 acres ot• reclaimed land, which will add 100 million lire per annum to the Italian national income, and incidentally, reduce unemployment from a little to less.

Depression must be shaken off. The government is afraid to act, capitalists are afraid to venture, investors seek " safe " securities, stockbrokers have not even the pluck to tell their clients to buy industrials at bargain sale prices. Never a sail is hoisted to catch a breeze. There is no justification for such pusillanimity. Trade is action and those who will not act become factors of depression.

It is for this reason that some of us have urged the Government to strong action over unemployment. Long ago Mr. Maynard Keynes pointed out that a liberal programme of national reconstruction, devoted solely to fruitful work, would not only " make work " but circu- late work, and give the nation " an impulse, a jolt, un acceleration." That was well said. The tuition is in a rut of depression. Let us get the wheels out of the rut. Trade feeds on trade, just as inaction promotes inaction. The Government can do much to give the nation a lead by changing pay for idleness into pay for work.

I am reminded of the psychology of the War. Ln 1915 there were men of leading among us who honestly thought that we had shot our bolt ; that we had come to the end of our resources ; that we could not go on. Fortunately, there were others with a different psychology who proved that mind can be the master of things. But it was a narrow shave, the contest between the two mentalities. The psychology of defeatism was not allowed to ruin us in war ; we have now to oppose it vigorously in peace.

L. C. Moxj•:v.