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during a boom, and adopted a more far-sighted and enlightened banking policy designed to discourage over-importation during boom and to make available during depression as much credit as possible at as low a rate as possible. It is important that a more elastic banking policy should be pursued, especially in regard to the rates charged. In the absence of a central bank it is natural that the joint-stock banks should be primarily concerned with the interests of their shareholders. Nevertheless., by virtue of the partial-monopoly position which they hold, their obligations to the country in reference to the control of credit with a view to stabilizing conditions cannot be ignored. Instead of waiting until a depression has already set in before raising their rates, these should be raised at a much earlier date to check boom expansion, particularly in regard to over-importation, rather than waiting until the ratio of advances to deposits or the state of London balances causes embarrassment. By cutting off the top of boom conditions the effects of depression might be much mitigated. (b) Similarly, with regard to the expenditure of borrowed money on public works, land development, and the like, an effort should be made to distribute such expenditure both by the Central Government and by local authorities in such a way not only so as not to cause or accentuate a boom but so as definitely to assist in damping booms and alleviating depressions. If expenditure of public money could be partially withheld when unemployment was low and increased when unemployment was high, the total amount of expenditure need not be increased and unemployment would be considerably alleviated. Professor Bowley has shown that in England such a policy is not out of the question, and its possibilities in New Zealand are worthy of investigation. Such a policy would require careful planning over a period of years, and the practical difficulties are admittedly great, but would not appear to be insuperable. The recently constituted Local Bodies' Loans Board might reasonably incorporate the above principle as a part of its general policy. (c) In the opinion of the committee, it is desirable that, the Government should pursue the policy of using the Budget surpluses of good times towards the reduction of debt (or towards the reduction of the burden of taxation) in bad times ; or to assist the policy outlined in the preceding paragraph —but especially towards the reduction of unproductive debt—rather than to the reduction of taxation when times happen to be good. In short, a Budget surplus in good times should not be made the excuse for a reduction in taxation in immediately following years, unless such years are times of depression. It is also important that borrowings, and therefore the policy which is outlined above in reference to the distribution of public works through time, should be directed as much as possible to undertakings which show a reasonable chance of being profitable at an early date. (d) Much also can be done by a recognition on the part of the business community of the evil effects of seeking for and obtaining large credits in times of boom and rising prices. If those engaged in business realized that such action frequently not only leads to their own financial embarrassment at a later date, but also may react disastrously upon the whole community, and for these reasons moderated their demand for credit, the difficulties of the banks in controlling credit in time of boom would be lessened. In order to assist business men in their forecast of trade conditions, more frequent banking statistics should be provided. It is, perhaps, desirable that a special body should be set up to interpret such statistics and make them available for business men, along the lines followed by the Harvard Economic Service and the London-Cambridge Economic Service. (e) The committee is of opinion that the Arbitration Court should direct its efforts to a more elastic adjustment of wage rates. We have already pointed out that it is doubtful whether wages are at present so artificially high as to be an important cause of unemployment; but so long as the Arbitration Court fixes wages for so long a period as three years or more at a time without provision for interim adjustments, there is always the danger of serious divergence between wages and price levels.* If wages were adjusted more closely to the rise and fall of prices, two effects would follow : — (i) The raising of wages would reduce the incentive to over-expansion and over-capitalization in times of boom, thus reducing the depression that normally follows. (ii) The lowering of wages to more economic levels in times of depression would make it possible to employ workers who are then unemployed. The committee is emphatic in stating, however, that elasticity should be upwards as well as downwards. This upward elasticity was insufficient during the war and post-war period. An upward elasticity would, as is suggested in (i), make it unnecessary for wages to fall to so low a level in bad times, and at the same time might give the worker a greater chance to accumulate a reserve against bad times. What is here said refers to general policy, and in reference to the present position should be read in conjunction with the discussion on page 37. which stresses the importance of factors other than wages. (4) The problem of seasonal and casual unemployment is difficult of solution, and few reasonably practicable suggestions seem possible at this stage. We suggest the desirability of conference and inquiry by employers and employees in industries especially affected, such as stevedoring, into the possibilities of decasualization and the provision of alternative occupations in slack times. .(5) The existence of " blind alley " occupations presents a further problem. These occupations are such that boys and girls entering them on leaving school cannot hope to .remain in them for more than a few years. They in no way provide a training or equipment for a future career. There are two main types —(a) The boy or girl may be employed in a factory on some special light work— e.g., minding a simple machine, paper-folding, or packing ; (b) he or she may be employed in some work of a more general and outdoor character —e.g., selling newspapers, running messages, or doing odd jobs about a shop or factory. Boys and girls enter these occupations not as learners but as wage-earners. The work is usually more remunerative for a start than in most other employments. It is, however, usually too light or simple to require the services of grown people. When, therefore,

* As already stressed, we consider other factors to be of more importance than wages in causing such disparity -Ms exists between " sheltered " and " unsheltered " prices, and such unemployment as is consequent on this disparity.

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