March 14.
There can be little doubt that, apart from the settlement of the still uneasy European situation, hopes of world recovery must wait on the progress of President Franklin Roosevelt's experiment which has been critically compared with the technique of the President Roosevelt's policy. Last month's review of the National City Bank of New York contains the following apposite observa~ tions:
It is regrettable that one effect of the assumption of authority by the Government over economic relationships has been to make many people believe that the Government is primarily responsible for prosperity. Under normal conditions industry, trade and Dusiness of all kinds are carried on by the people without much governmental intervention. The relations involved are those of persons or groups to other persons or groups, and are determined by themselves. The responsibility for adjusting the relations when they become disturbed falls on indivi nals, who under the pressure of distress have the strongest possible incentive to make the necessary corrections. "The Government is, undoubledly in a position to facltate the adjustments, and times of great disorder should properly endeavour to do so, But when the Government assumes the responsibility, and individuals count upon' administrative policy to get them out of their troubles, they are not likely to make as effective efforts on their own part to Ket the system in order. On the contrary, they tend to seek shelter from the necessity for painful readjustments. Those who enjoy or believe they enjoy special advantages, such as arbitrarily fixed money wages or prices, seek the support of the Government in pregecving them, and others appeal to Mr. Roosevelt may have read those words with rueful glances at his advisers. Had he been able: to confront some of his "brain trust" appropriate and explains why the President has been able to set off sad failures against brilliantly attained success. A Washington message has just summed up his position by declaring that, in spite of growing hostility in with that sound piece of economic wisdom two years ago, perhaps his present popularity might not be so great, but the risk of losing what popularity he had gained would not be the menacing phantom that it appears to be to-day.
Indeed it is now pointed out that the recent improvement business recorded in America is nation at his back. Yet it is easy to imagine a rapid deterioration in this support, if the next few months do not dear the fruit expected by confident admirers of the New Deal. The breach be-
[tween the Administration and the bankers. has been apparently healed. It must be confessed that Mr. Roosevelt faces the questions now propounded to him by. the situation, he will either have to continue' running counter to sound banking opinion or he will have to risk his popularity by bringing the Government's policy more into line with orthodoxy, One way seems to lead to finanjeial disaster: the other to complete loss of political reputation. The way of the New Deal has accustomed the President and his advisers to the delicate process of steering a course between Scylla and Charybdis, but ability in maintaining this agile seamanship is not inexhaustible, The welter of control and adjustments now forming a part of the Administration's routine presents enormous difficulties to those who seek to assess the actual point of recovery reached. The danger of making further changes in economic relationships in order to dispose of obstacles suddenly encountered is becoming clearer each day. Yet the Government is committed to the task of preserving equilibrium and having produced a thoroughly bewildering set of complexities, it may not find it possible to temper control, much as it might like to pay that tribute to the hard facts of the situation, Here in China, where the merits of proposals for "doing something" to cope with a currency and financial crisis are being busily yeanvassed, it may be opportune to refer toa recent authoritative the fourth "upward swing" since the world depression reached its nadir in the middle of 1932. The three previous upward movements were, it is declared, checked by political intrusions. In the autumn of 1932 the Presidential election and the controversy over war-debts were the adverse factors. In 1933 the second improvement was subject to the excessive strain of speculative activities and to the uncertainties created "by arbitrary alterations in economic relationships and by monetary experimentation". Last September a third improvement was wrecked "on the barrier of increased costs and prices and other maladjustments" and pensions in regard Govern:
And the argument is cogently made that if this fourth turn of the tide is to be given ils full value, the mistakes of the past have to be recognized and corrected by cooperation. At the present time these observations seem to afford 'a salutary object-lesson to China, There has been so much discussion of possible expedients which might be adopted to solve the monetary crisis here that the impression of relying on Government action is discernible in quarters where, normally, such an attitude of dependence would be far to seek. Serious though the aspect of affairs may be, it is quite probable that a policy of masterly inactivity would be the best which the Government could adopt. It would enable economic forces to exert their correct well as their eventually healing influence without the disadvantage of carryimg experimental checks imposed, as they necessarily must be imposed, without any real certainty of the results likely to accrue from their operation,
Text read from the printed page and cleaned; old type leaves the occasional error.