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portion of the attention of the Conference and its committees. This memorandum discusses some of the issues which may be raised . In time of economic depression it is a natural tendency to seek for some one or something to blame. Unfortunately, the variety and complexity of the factors responsible is seldom sufficiently realized, and depression tends to be interpreted in terms of some single special circumstance or set of circumstances which by their nature appear relatively simple to understand and on the face of them appear to offer a plausible explanation. Frequently these circumstances are themselves the result of more complex and deep-seated causal forces, which, by virtue of their apparent remoteness from the observed effects, tend to be overlooked. If the apparent causes fit in with previous predilictions on the subject, or the real causes run counter to established prejudice or vested interest, and more especially if the apparent causes appear capable of direct attack while the real causes do not. the superficial explanation of depression becomes widely accepted and there is a tendency to ignore the fundamental conditions on which the observed effects depend. This is particularly true of the depression from which we have been suffering of recent years, which has pressed with especial severity on the agricultural industries. Searching for a cause which appears capable of immediate removal, there are many who have laid the blame for depression at the door of the Arbitration Court. In some quarters the attack on the Court has been conducted with all the fervour of a religious crusade. There is a common tendency to assume that the case for abolition of compulsory arbitration is established if it be proved that the Arbitration Court is defective, and if it imposes some conditions on industry which, taken by themselves, are injurious. A case presented along these lines is inadequate. A completely convincing case for abolition must show—(l) That the operation of the Court does impose handicaps on industry ; (2) that these are not balanced by compensating advantages ; (-3) that the evils would disappear with the abolition of the Court and that no evils of equal or greater magnitude than these would be likely to arise as the result of abolition. If the Arbitration Court is responsible to any considerable degree for the economic malaise which is afflicting the country, and if there are no compensating advantages, and if the evils for which our present arbitration system is responsible would be very considerably reduced with the repeal of the existing Act, then the Court should be abolished or the system drastically revised, and we should be a very lucky people to be able to effect a return to economic health by so simple a process. It is my sincere opinion that there are no grounds for the extravagant optimism which such a view implies. It is probably desirable that the system of compulsory arbitration should be revised in some particulars ; but to blame it for all. or even an appreciable part of our economic troubles is to be blind to factors of considerably greater importance and to raise hopes from abolition or amendment which would be rudely disappointed. In reference to the existing economic conditions of New Zealand, it is the duty of those concerned with the economic welfare of the country, whether they be legislators, employers, or employees, to examine not only the influence of the Arbitration Court, but also the influence of other factors which are largely independent of it. It is of course true that the case which is outlined above might be established even though the Arbitration Court were not responsible for the existing depression in this country. In this memorandum I therefore propose to examine certain general criticisms before proceeding to place the Court in what I believe to be its proper perspective as a factor in the present depression. I wish to make it clear that I am aware that the Arbitration Court has many weaknesses : but it is my thesis (1) that the net economic and social welfare of the country would be reduced if the Court were abolished, (2) that the Arbitration Court is, in fact, not an important factor in the present depression. 11. General Criticisms of the Court. The general arguments raised against the system of compulsory arbitration are familiar, and may be summarized as follows :—• 1. Interference with Alleged Natural Laws. (a) The principle of compulsory arbitration is wrong because it is a highly artificial interference with the natural laws of industry. The above statement represents a view which is fortunately now held only by a small minority of extreme individualists, and revives a confusion of means with ends which was common eighty or a hundred years ago. It asserts that the so-called " Laws of Economics " are natural, inviolable laws which cannot be broken save at an economic cost. The adherents to the doctrine are in essence advocating —though when pressed they will admit many reservations and qualifications —the complete and absolute right of an individual to do what he likes with his own property, irrespective of the social consequences. Such a crude appeal to the sanctity of private property and the merits of unrestricted competition is accepted by no modern State, and is infringed upon by the whole range of factory Acts, legislation against sweating, legislation against trade combinations, tariffs, and the greater part of the body of social legislation. Economic laws are not " imperatives " like legal enactments, nor immutable laws of nature, but statements of general tendencies —i.e., that under the operation of such-and-such factors, such-and-such consequences are likely to follow. These tendencies are capable of human direction and control; for, in fact, human direction and control are among the most important of the factors themselves. Individual economic freedom is not an end in itself, but is a means towards the goal of economic effort, which should be the maximum economic welfare of the community. Not only is it incontrovertible that social regulation and control of economic effort is not by any means necessarily injurious, but also it is beyond question that such control is often essential if economic welfare is to be increased or maintained ; for frequently individual and social interests conflict.

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