1930s >> 1931 >> no-328-december-1931

Overproduction Baffles the Capitalists.

The Times” on September 5th, had an editorial on the present world economic situation that was strangely frank and illuminating, as the following extracts will show:—

   How disastrously the financial machinery of the world is out of gear was strikingly illustrated the other day, when, in order to effect an exchange of commodities, the Brazilian Government and the Federal Farm Board of the United States had to resort to the primitive method of direct barter. They signed an agreement exchanging 1,050,000 bags of coffee for 25,000,000 bushels of wheat. That method of meeting the situation is, at any rate., better than some of those which have been adopted. In Texas and Oklahoma the military took charge of the oil wells, not to prevent any interference with production, but to stop production, and in Kansas orders were given to stop production in specified areas  . . .
    The cotton growers of the Southern States were recently urged by the Federal Farm Board to destroy one-third of their crops, and, though they indignantly rejected this suggestion, they themselves are seriously considering proposals to prohibit the growing, gathering or ginning of cotton next year. In Brazil hundreds of thousands of bags of coffee have been draught and destroyed by the Coffee States Council.  . . .
     Every one knows that there is over-production in the sense that there is more cotton, more wheat, more sugar, more coffee, and, apparently, more of every kind of food and raw material on the market than the consumer is able to buy at prices remunerative to the grower. . . .
    Over-production is hard to imagine in the sense that more wheat, for example, is being grown than the world can use. At any rate it cannot be said to exist so long as there are people who cannot get enough bread to eat.  . . .
    Half a dozen professors of political economy, discussing the practical questions on which their studies should enable them to throw light, can disagree among themselves as wholeheartedly as any half a dozen business men in a railway carriage. But somehow or other, with or without the aid of the scientific economist, answers will have to be found for the economic riddles over which the world is now bewildered. Until they are solved, or, perhaps, solve themselves, there can be no general return to prosperity.

Detailed comment would spoil this picture.
 
Too much of everything, but we are poor because we can’t buy! America can’t sell so she takes to barter. The owners in the producing industries have taken fright and are destroying or restricting production! The sum total of opinion in Tory, Liberal, Labour and T.U.C. camps is that the only way out for this country is a general cut in wages or an increase in prices—a reduction in buying power! Under it all is the hope, frankly expressed above, that somehow or other things will straighten themselves out.
 
The capitalists, their guides and scribes, are impotent in the face of productive machinery so prolific that the wealth turned out is clogging and weighing the system down. The only real answer they have is to find a means, satisfactory to the bulk of their class, for restricting production and parcelling out markets.
Gilmac.