ECONOMIST URGES DEFLATION

Chronicle (Levin), 30 May 1946, Page 4

ECONOMIST URGES DEFLATION

-Press Association

GOYERNMENT'S POLICY WILL BE COUNTRY'S D0WNFALL N.Z.'S POSITION REVIEWED

Titi Telearavh-

WANGANUI, May 29. Deflation by means of the removal of subsidies, by reditctiolis in wages axicl salaries, and by increases in interest rates to reduce the purchasing power in. the hands of consumers, was advocatea by Mr. D. L. M. Martin, economic research officer at headquarters of Eederated Farmers of New Zealand, Welling- - ton, in an address to the inter-pro-vincial conference of deiegates to theJederation representing the lower portion of the North Island, which opened here today. With deflation, said Mr. Martin, there should he increased internal production and importation and increased prices ! for exports. The three methods might i be used in conjunction with each other. j Keviewing New Zealand's present I economic situation, Mr. Martin saicl ' that there was a state of unbalance as | the result of war. There was therefore

more purchasing power m the nantis or the consumer than there were goods to satisfv the demands. Bank notes in. circulation had increased from £12,000,000 in 1939 to £44,000,000 in 194(5. Bank 5 deposits had increased from £142,000,000' jto £291,000,000 and the aggregate ' private income from £186,000,000 to i £292,000,000 in 1944. Ile said that Govj ernment action is needed now to proivide the incentive to produce more by | reducing income tax and subsidies and by raising the working week from 40 ! to 44 or 48 hours. _ ' ' The stagnant and atrophied policy ; of the Government will be the downlail : of the country," said Mr. Martin, who 1 went on to deal with Empire trade anci ! the threats that were developing. j Later in the day the conference expressed disapproval of the method of 1 subsidising crops as a means to increase production. ''We are absolutely sich of subsidies. They are hidden taxes and now the war is over subsidies should be - taken otf," declared one delegate. ;i . ^