"NEW ZEALAND THE GOLDEN"

Dominion, Volume 12, Issue 39, 9 November 1918, Page 3

"NEW ZEALAND THE GOLDEN"

Sir,—ln your issue of October 19 there i occurs under the above heading a parhgraph from which I take the following extract:—"lf prices continue as high as seems possible, New Zealand aftho war should witness a further era of prosperity attended by heavy buying, and an important campaign of development. Tho years immediately following tho war will probably show very rapid progress." No doubt there is much virtue in an "if," that most important word with which this paragraph commences; but its. virtue and importance are apt to be overlooked by most of your readers, whose minds aro filled with the glowing picture which the paragraph conjures up. My object in this letter is to warn your readers, as 'well as I may, against this possible oversight, and to place on that little word the degree of emphasis it seems to me to need.

I am awaro that extremely optimistic opinions aro widely prevalent in New Zealand as to the favourable trade conditions which are expected to prevail here after tho war; but, for my own part, both from such consideration as I have been able to give to the matter myself, and allowing due weight to such arguments of others as have- come under my notice, I am wholly unable to discover any justification for this optimism. On the contrary, while there appears to bo no arguments worthy of tho namo in its favour, there is much to be said for the , opposing view. I can mention here only a very few of the reasons which have influenced me in coming to this conclusion, but they are' sufficient, I think, to justify it. Tho prosperity of New Zealand has, from its earliest days, been dependent on the ealo < of. its. products .abroad at .remunerative prices, its own manufactures aro so'small as to bo negligible. So'long as the purchasing power of its customers abroad remained unimpaired there was no reason to fear any early cessation of that prosperity, iiui, unfortunately, it is. just this purchasing power which almost certainly will be ailected, and seriously affected. All, doubtless; will agree with the statement that every man's ability to buy is limited by his cupital and income, but for some quite incomprehensible reason thoy are not so ready to agree with tho statement that a nation's ability to buy is similarly limited. Yet we have only to consider that tlie purchasing power of a nation is but the aggregate of the purchasing power of its individual units, and that this amount, therefore, however great, must be limited also. 'Whatever the amount of this limited purchasing power of New Zealand's customers' beioru the war, it. must have suffered a serious decrease during the war years, and must decrease -itill further tho longer the' war lasts. Among tho causes contributing to this lcsult may be named:—

(1) The dislocation of trade caused by the change from peace to war conditions. (2) The immense, unproductive expenditure, public and privato, directly and indirectly consequent on the war, part of which is taken from' present income and part, ir. tho shape of interest and sinking fund on the national indebtedness, will' be taken from future nit-Dine,

t3) The heavy loss of capital duo to the destruction'of buildings, plant, stock, , shipping, etc.

' [i) Tho lose, of life and consequent lowering of the productive power of labour. (5) The readjustment of the whole industrial organisation to the new conditions which will obtain after the war, and which must be complete" before the best results can be obtained.

The result of theso various losses of capital and income, together with many more which a complete analysis of the conditions would probably disclose, must, by lowering the purchasing power of our customers, decreasj their demand for our goods, and produce a considerable fall in prices and general values. Let noc tho New, Zealand farmer suppose that this fall in values and prices will be to the pre-war level only. It must be far below this, probably- reaching a point lower, than has been known for many years past, and he must be prepared accordingly. Ho luw, or should have, so strengthened his financial position during the fat years which are now nearing the end, that he should oe in a position to i'aci.- the lean years which aro to follow with some confidence in his ability to stand the severe strain on resources which those years will bring. Tho fate of those who have failed so to provide will not be enviable.

Dependent as are all New Zealand businesses on the farming industry, the depression, with its accompanying fall m values, profits, rents, wages, etc., may be expected to be general. Now, having regard to the probable severity of the trouble ahead, is it iikely that any legislative enactments, arbitration courts, unions, or anything else can avail to keep thorn up? In local conditions, also, may be found many circumstances each adding ita quota to tho load the future has in store for us. There is our rapidlygrowing indebtcdneds. both of tho central Government and iti lieutenants, tho councils and otlior public bodies. There is the necessity of providing for soldiers and their dependants. And there is tho inflated condition of values and securities of all hinds. In explanation of this lost item, I may point out that values in New Zealand haw been maintained at an artificially high level for many years past, one of the many doubtful benefits of our .peculiar industrial legislation. They may bo compared to native plants grown in a hothouse, mating a more rapid but unnatural growth, and thereforo lacking the sturdy health and strength, and more subject to the ntlacks of insects and disease, than are the same plants grown in the open air. Just as certainly as these plants would shrivel if a gale carried away their glass protection, and they were exposed to adverse weather conditions outside, so. by rendering inoperative their legislative protection, must New Zealand values shrink on the first strong blast of the wind of adversity. Beyond this a further shrinkage may

be expected, duo to what may be called tho backward swing of tho pendulum— which invariably accompanies these changes. Just as far as these values havo been carried above their natural level, just to that extent will they swing Lack below that level when their legislative supports are removed, if I havo read the signs of the times aright, tho industrial typhoon which will presently sweep over New Zealand will be sufficiently severe to do considerable damage, and businesses need to be on a tolerably firm foundation if they are to be found standing after the violence of tho storm is past. No doubt our banks are sufficiently strong and well managed to avoid it financial crisis, and' our ieaumg business houses and many other of our more careful and far-seeing business men will weather the storm safely. But, if tho best happens that can be hoped for, there must still be a good deal of wreckage about. Ido not overlook the fact that a prohphet of evil has no honour in his own country. This is the more natural from the fact that a people, whoso palates have been tickled by tho sugary promises of several generations of party politicians, are unlikely to receive an unpleasant truth with favour. I would point out to all such, however, that it is better that trade should face the brae-ing, though bitter, air of fact than that it should live in the extremely enervating climate of the fool's paradise in which it seems so inclined to disport itself, a climate than which there is none more inimical to its healthy existence. If bad times are coming, then the sooner we realise tho fact and make such preparation to meet them as may be practicable the better. Ib is upon the banks, and after them the larger business houses, that the chief strain and responsibility must fall. Their strength and skilful management will probably be tested to the utmost. All, however, by exercising reasonable economy, could help if they would, but I fear they will not. Among a people who are naturally inclined to waste and extravagance and who have been made more so by some half-century of "advanced legislation," who stigmatiso as "mean" any well-to-do man who does not spend his money lavishly, and, indeed,' anyone who exercises the most ordinary care in his expenditure, among whom the old fallacy that "extravagance is good for trade" is still accepted as blindly as ever —among such a people, I say, it is futile to preach economy. The very meaning of the word is ill-understood. Nothing, I fear, short of a severe experience, such as that now coming' to them, seems likely to teach .them anything in this direction.

Neither will it avail to cry to the Government for help in the way so familiar in New Zealand. In cases of this kind it is beyond the power of a government to help, though 1- fear the fact will not prevent it making matters worse by trying.' Regeneration can come only from the people themselves.

New Zealand "advanced legislation", is approaching the hour of its trial. If it possesses but a 6mall part of the virtues its many admirers claim for it, it) will stand by the people in the time of thenneed. But if, as I gravely suspect, its virtues are few and superficial, while its vices are many and deep-seated, then, so far from its being a help, it will omy tend to accentuate the distress and hinder still further the necessarily 6low work of reconstruction. As I have before stated, its inilucnoa in the past has tended to waste and oxtra.vagance. Possibly Now Zealand, being a young nation, may consider it ipart of its birthright to play tho prodigal and generally to sow its wild oats, firmly persuaded, as its people are, that its fetish, the Government, possesses an unlimited supply of fatted calves to bo killed for their benefit as occasion may require, if they will only pray to it loud enough. But, if I am not mistaken, they have now to learn that tho time of fatted calves is. past for somo years to come, and they will be well advised to make the new supply, when.it cornea, of their own rearing.—l am, etc., A. BLAIR. Wangonui, November 7.