Diary of a Labour Man 1917 - 1945

Full Text On the Backbenches


The West Australian, The Views of Labour, 20 February, 1932


At the request of the West Australian branch of the Australian Labour Party, "The West Australian" has set aside a column weekly for the publication of views of the responsible body of Labour. Publication of these views does not, of course, imply endorsement of them.

(By J. Curtin.)

At last one of the great nations has essayed to meet the depression by a readjustment of monetary policy. No matter what criticism may be advanced in Australia regarding the dangers of resisting deflation by the employment of a controlled inflation, the United States is doing it. There, as here, the method used to meet the situation has been that of adjusting costs - chiefly wages - to the falling price level. For three years, practically, this has been the chief aim of the world. And for the whole of that period the aggregate of the workless has been steadily increasing.

At the end of 1929 the number out of employment in the chief industrial countries was estimated to be 10 millions; at the end of 1930 it was 20 millions; and at the end of 1931 it was 26 millions! Falling wages did not allow costs to overtake the downward trend of prices, but accentuated it; falling wages did not reduce the ranks of the unemployed - the number kept on growing.

It was the authoritative finding of the Macmillan Committee on Finance and Industry that the Central Banks, by international action, should invoke monetary measures to raise the price level. This has not been done. The difficulties in the way of joint international policy, either by Governments or banks, appear, in the present mood of the world, insuperable. The course is clear enough, but it is not followed. And because, in the abstract, the crisis in the true logical sense called for international treatment, each country, hitherto, has declared that it is useless for it to take the initiative.

Behind this debating rampart of reaction the use of national monetary policy by the country has been resisted. The whole burden of the depression has been thrown on the producers and the workers, who have been told to adjust their relations within the conditions arising from the deranged working of the financial system. And the more they have tried, the less they have succeeded.


The United States has now put an end to this contention. Whatever else is clear it is now established that the country does not intend to wait until the depression cures itself.

It does not longer depend on bringing wages down to the bottomless pit of a shifting price level. It is deliberately using the national credit to artificially simulate industry; improve stocks; banish the fears that lead to the hoarding of private credit, raise prices; ease the strain on debtors and revitalise the securities of creditors; and promote that industrial activity which will mean the re-employment of large numbers of those whom the depression has deprived of the means of life. Describe this "Plan by any name we like, it is none the less a more hopeful one than that which represents a more severe application of its predecessors. Australia has now some reason to study America.

But why not study ourselves? Up to date all the citizens have depended on Governments to meet the position. These, in turn, have relied on economists, some of whom have been released by their Universities to serve as direct employees of banks. There has been no review of the relations of finance and industry such as that made by the British Committee.

By now Australian employers must have discovered that the struggle to reduce costs to a price-level floundering in quicksand is a losing one. In the first place the "lag" in the cost-fall means loss to most and bankruptcy to many; the absolute impossibility of Government costs being scaled down adequately to allow of immediate tax relief makes the adjustment too partial to be an effective relief to overhead charges; the 20 per cent "cut" has not eased the strain for them; it is as competitively severe now as before it was applied.


The workers, on their part, do not need logical incentives to action. They realise that employers, individually or collectively, are not responsible for unemployment, but that both are the victims of a system which fails to provide the necessary purchasing power. And this is the crux of the whole difficulty for Australia. Of what avail for farmers, trades unions, or employers, to rail at each other, or at Governments, when the major element of the problem that perplexes them all alike is centred in a relationship which they will not review, as though it were touched by the tabu mark of an aboriginal medicine man?

We, apparently, hope by the readjustment of the relations of workers to employers, of taxpayers to Governments, of States to the Commonwealth, of farmers to fertiliser merchants, and so on, to resolve a problem that has to do with the relations of finance and industry. It has not worked, and it will not work.

So long as remedial action is deferred the human consequences are much the same as those of a famine and the misery arising is identical with it. Actually the problem is one, not of shortage of supply, but of faulty mechanism. It is not a case for sacrifices to be made by all classes and all nations, but for a better co-ordination between finance and industry, enabling goods to be sold to those who need them and be produced by those ready to produce them.

As the employers and the workers are the chief sufferers by the crisis, is there no possibility of their jointly surveying the position? They each have logical incentives to endeavour. Neither individually or collectively can the employers be saddled with the responsibility of unemployment: yet its magnitude prejudices their business even if it does not actually involve ruin for many of them. I am not here contending that both have all the common interest, but I am insisting that in respect to the relations of finance and industry the failure of buying to keep pace with production - a failure which means loss and, perhaps, ruin to the employers, and throws the worker out of employment in the process - is a fact outside the usual wages versus profits controversy, and should be recognised as such.


The Prime Minister's speech at the Loan Council contained a passage which is poignantly significant. Mr. Lyons said: "They could not balance the budgets while the workers were unemployed, and they could not find work for the unemployed until the budgets were balanced". He was speaking of Governments to their respective leaders.

But has industry nothing to say? Here in Western Australia a reasonable effort by the trades unions and the Employers' Federation to canvass the problem may not produce spectacular results, but it would help. At least there would be the psychological advantage to each of association in a common object, and it well may be that by enlarging the discussion to embrace industry as well as the position of the Governments that the heads of the latter may be helped.

We have before us now a mass of data and a considerable experience. At least it should be traversed; a stock-taking by the chief interests involved is not too much to ask. So far the experts have failed; the bankers have not succeeded; the Governments have proclaimed their impotence. Maybe, industry, which is the victim of all of it, may not be unequal to helping itself.

The imperativeness of the position need not be stressed. Economically we are faced with immediate demands: Governments cannot longer maintain even their present sustenance expenditure; their revenues keep on declining no matter what economies they practise. The unemployed families have now exhausted all their savings. Their plight is a human tragedy. And default cannot be said to be effectually guarded against. The voice of commerce and industry should not longer be silenced; the trades unions cannot longer continue a dumb acquiescence in futility. The duty of industry and of Governments to finance we already know. We also know what the duty involves. But what of the duty of finance to industry? Has the latter nothing to say? The United States considers that it has.

John Curtin Prime Ministerial Library. Records of West Australian News Ltd. The West Australian, The Views of Labour, February 20, 1932 JCPML00610/4.