Personal - Economy and Public Welfare
BY HAROLD COX.
THE widespread appeal for personal economy in expeOiture, to help the country in its Present needs, has provoked from many quarters the opposing plea' that by reducing expenditure we diminish employ- ment.. We have, for example, people writing to the Press to complain that the abandonment of banquets, which has. been taking place in the interests of economy, has resulted in the loss of many thousands of pounds to catering firms and the dismissal of many employees. This is, a very old cry, raised again and again when a particular 'group of persons is seen to be suffering. It overlooks; what ought to be, to most people, the fairly obvious' fact that the money which is not spent on a particular purpose is either spent on something else or it is saved and invested. So far as employment is concerned, investment of savings is only another form of spending. The money is lent to people who spend it on schemes intended to yield profits, out of which interest or dividends will be paid to the lender.
This ever-recurring delusion, that economy destroys employment, must be ruled out as altogether irrelevant to present issues. What we have to think about, when considering how we should spend our money or how much we should save, is not the question of employment but the results produced, and what their value will be to ourselves, or to our dependants, and to our country. At the present time, what our country specially needs is that we should save and invest all we can, so that more capital may be available for the creation of new wealth. The War involved the loss to Great Britain of several thousand million pounds' worth of wealth that previous generations had accumulated. After the War the whole country ought to have made a big effort to restore these losses. Instead we have been indulging in an orgy of public as well as of private extravagance. There has been hardly any effective reduction of the War Debt, and the Government is now spending many millions a year in forms of State-aid which tend to encourage idleness rather than to stimulate industry. At the same time many of our private citizens, who before the War used prudently to count their pennies, are now spending pounds recklessly on every kind of ephemeral indulgence.
Happily, not all of our population are so spending. The figures published by the various institutions for dealing with small savings show that many of the poorer classes and of the moderately well-to-do are rapidly accumulating capital. But much more than this is needed if as a nation we are to recover financial stability. We need a spirit of stern economy throughout the whole nation.
Economy takes two forms—saving for investment, and wise expenditure that will produce permanent values. Saving for investment leads to an increase in the volume of capital, and as more capital becomes available its cost declines. That brings a direct benefit to industry and it also facilitates the success of schemes for the conversion of War Loan, with a consequent annual saving to the Exchequer.
Wise expenditure can best be defined as the difference between .spending on ephemeral pleasures and spending on objects of more or less permanent value. Beer and wine and tobacco, cinemas and motor trips, all offer attractions to the average person, but the pleasures they bring pass away in a few minutes or hours. Some ephemeral Pleasures may be needed to keep our bodies in good condition and our minds contented ; but at a time of national crisis it ought not to be difficult so to attune our minds that we shall get more -pleasure out of life if we spend our money on something that we feel is adding to the permanent wealth of the nation: Take, for example, as a -practical issue—the question of housing for the working classes. If • the mass of the people had been content during the past decade to spend less on cinemas and more on investment in building societies they could probably have secured for themselves most of the housing accommodation they needed. Instead they have accepted State charity which his involved throwing upon the nation a heavy burden of debt, as the result of the reckless way in which Government housing schemes have been carried out. With the wealthier classes similar contrasts arise.' A rich man may get much pleasure for himself out of an expensive motor car ; but he would confer a definite benefit upon the nation if he spent the money instead on improving his estate.
One special point with regard to private expenditure which may here be emphasized relates to the question of foreign travel. In normal times foreign travel is an excellent tonic much to be valued. It would be bad for England as the centre of a world Empire if her people all suffered from " a sea-sick imagination that cannot cross the Channel." But the position to-day is not normal. Great Britain is badly hit by the fact that her balance of trade has got on to the wrong side, and a considerable improvement in the balance could be secured if all those of us who have in previous years made a practice of spending money on travel abroad were to spend it instead on travel at home. This trans- ference would mean a net financial gain to the nation.
More generally, in this time of national stress, each of us has to think how best he can use his money for the benefit of his country, both by saving carefully and by spending thoughtfully.
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