The New Zealand Railways Magazine, Volume 6, Issue 2 (June 1, 1931)
“From War to Debts, From Debts, From Debts to War”—Is the World Heading that Way?— War is a Counsel of Despair.
Job for Economists.
With the passing of the Great War there came a remarkable change in public thought. Political proposals of a constitutional character (new voting systems, the referendum, bi-cameral amendments, etc.) ceased to interest the public as they had done. Even the House of Lords issue in Britain entered into a period of slumber. In the place of these came problems of social economics, of production and wages, pensions, debts, taxation and tariffs. The huge legacy of war debts no doubt was one of the causes of this change in the centre of gravity. But, over and above that, the immense new material wealth of the Twentieth Century world was bound to give a bias towards economics and away from high politics. The academic food of last century's politicians could not satisfy the new materialism.
This increasing ascendancy of economics over politics has compelled the politician to put on economic spectacles, to consult economists, even to be ruled by them. In the Press the pre-war political gossip—of Kaisers, Tsars, and Kings— from Berlin, St. Petersburg, Paris, etc., has little modern counterpart; and what there is of it is overshadowed by bread-and-butter issues. Political practices have broken free from supposedly immutable political principles, and have attuned themselves expediently to considerations of time and place. For instance, Labour is tariffite in thinly populated Australia, and anti-tariff in populous Britain. On the same issue Conservatism has split more than once. Though old adherents of the “pure science” of politics do not like it, that “science” becomes more and more the handmaid of economic opportunism.
Sufferers Seek Relief.
In the days of the Czars, Britain and the British Empire easily became impressed with a Russian scare in the heart of Asia. There was always a fear that some Foreign Office in some other country was minded to grab some doubtful territory. Though the Soviet forces are still on the Oxus and on the Amur, what is now most dreaded is Soviet propaganda, and Soviet wheat, and perhaps butter. Everyone wants things cheaper, yet imposes an impossible condition— that the price-fall be confined to what he does not sell. Consequently, all are very discontented, especially as price-fall relentlessly increases debt. As might have been expected, uneconomic politicians do page 55 not always shine as economists. Many millions, the world over, suffer.
War no Remedy.
And now, having drifted steadily from the old atmosphere of “high politics” to an atmosphere of distressful and resentful “econopolitics,” is there a danger of a flash back? It was a saying in the last century that a cure for domestic distress was a successful war; and some people believed that a vein of similar psychology in Napoleon III. threw him and France into the Prussian trap in 1870. To attempt to draw a people's attention from ills at home to glorious war abroad is at best a gamble. And since a warfare of trenches, covering years, has replaced the Sedans and Waterloos, war as a remedy for anything seems more than ever incredible. What can war create except bankruptcy? And yet in recent months the rumour of a new war has grown up in Europe, and is growing still.
The smouldering fires of much poverty and sweating and some idleness, which may be attributed in part to the incapacity of politicians to face the new dominating economic problems, are real enough, and might be kindled so as to provide the flash-back from an inequitable commercialism to an annihilating warfare. It is conceivable that somewhere in Europe or Asia public opinion could be so fanned to an outburst. But if the common sense of peoples is not proof against international incendiarism, are not the creditor forces of the modern world sufficiently self-interested to intervene and prevent the fanning of the flames of a conflict that means total destruction? They have seen their bonds barely survive the blaze of 1914–18. Is it to be hoped that the inverted pyramid of world debts could stand the shock of another conflagration?
Debts and Despair.
Of much immediate consequence is Germany's demand for another review of the debts. As measured by the lower prices of goods the war debts are crushing on all debtors, and Germany declares that her share of the burden is unbearable. Behind the German political mission to England is the renewed demand for a more practical rearrangement of the economic burden, or for a moratorium; and in the United States (the ultimate creditor) Senator Borah's reported utterances go a long way towards encouraging the debtor countries to hope for something. There is a feeling that prevalent burdens, if not eased, will play into the hands of warmongers and other wreckers. Things must not be allowed to become so bad that any large section of people can be persuaded to prefer war. Thus politicalism and militarism again become interlocked with the economic tangle.
If it became economically necessary to reduce, by persuasion or by force, the burden of public debts in Europe and as between Europe and America, then Australia's debts would become relatively a small affair. But for the present they stand before the world as the subject of a great experiment. The Australian Premiers’ Conference has just decided to ask internal bondholders to voluntarily convert about 550 millions of debt, bearing interest normally at about 5 per cent, to about 4 per cent., thus saving the Australian Governments 6 1/2 millions a year in interest, and thus avoiding a probable default at an early date in payment by Governments of interest due. Voluntary conversion (unforced by taxation) would not only bring financial relief, but its moral effect would be enormous.
An All-round Writing-down?
What, then, does the future hold? A rearrangement of economic burdens by voluntary agreement—voluntary acceptance of reduced interest by the bondholder, as of reduced pay by the worker, reduced rents, etc.? Or a state of deadlock between creditor and debtor individuals, and between creditor and debtor page 56 countries, leading to deeper depression, which militarists may fan into a credit-destroying war? Ludendorff (London cablegram 4th June) apparently has no doubt of the issue:
Western civilisation crashes into economic ruin, Asia and Africa profiting by the destruction of Europe.
The onus is on civilisation to prove Ludendorff wrong. That can only be done by political leaders possessed of complete economic vision.
Action at Last!
Since the above was written President Hoover has proposed a year's moratorium —an event of outstanding world-importance, and surely justifying what has been stated on this page, not only this month but in earlier months, concerning the perilous over-burden of the debts, crushing not only to the ultimate debtor (Germany) but to the ultimate creditor, America herself. Unless they had realised that Europe's suffering is America's suffering, the President could not have so acted, and Senator Borah would not have changed his course. The next move is with the nations that are both debtor and creditor. Prime Minister Ramsay MacDonald has already promised co-operation in details, speaking for “His Majesty's Government in the United Kingdom.” Though a year's moratorium is in no way synonymous with debt-cancellation, its economic success would immensely strengthen the case for general debt-reduction. All eyes are now on France, who can make or mar.
Rail Travel in England and New Zealand
“I have often heard complaints of the New Zealand railways, but, taking into consideration the difference in cost between first-class accommodation in England and the Dominion, I would give them a flat contradiction,” said Mr. Arthur Rose, who returned to Christchurch recently from an extended trip abroad. “In England,” he explained, “you have to pay about 2 1/4 d. a mile for travel, against only about l 1/2d. in New Zealand. I am satisfied that if the New Zealand public was prepared to pay the same rate as in England, our railways would hold their own.”—(From the Christchurch “Press.”)