The Dominion. MONDAY, NOVEMBER 15, 1820. PRICES AND WAGES
Soue people, noting the fall in prices abroad which already is reflected to some oxtent in this country, are content to take the comfortable view expressed recently by an American writer that the consumer dominates the situation and that economy on the part of consumers and an avoidance of foolish spending will automatically bring prices down to a "fair" level. Any examination of the facts, however, will show that this contention presents at most only a part of tho truth, and perhaps not the most important part. Foolish spending is unwise at any time, and the reduction of purchases to a minimum is' the best method of defeating speculators who "hold for a rise," whether their operations relate to luxuries or necessaries. lteccnt events, both in the United States and in Great Britain, have demonstrated, however, thab the problem of bringing down high prices is very far from being identified with that of withholding unjust gains from profiteers. Profiteering and speculative trading admittedly obtain to some extent in all commercial countries, but this does not alter fcho fact that) amongst the factors which govern prices wages take a vastly more important place than profits. This is brought out very clearly in recent American and British experience. One of Saturday's_ cablegrams, for instance, mentioned that falling prices in the United States are accompanied in some cases by serious unemployment and in others by a substantial reduction in the wages of labour. "Reports throughout the country," it was added, "indicate that wages have been reduced by between 25 and 50 per cent, in all sections of various trades. Workers in many places have voluntarily accepted reductions." This can only be taken to mean that in the industries to which these observations refer—cotton manufacture and others —production at the reduced prices enforced by a fallingoff in demand is found to be impossible with wages at their recent level. The point brought out in this case is that high prices were at least in great part made necessary by high wages and the increase in other items of working cost, and not by profiteering or the arbitrary exaction of unjust profits. Somewhat similar conditions in the British wholesale drapery trade are discussed by the Manchester Guardian in tho course of one, of to-day's cablegrams reviewing •"financial and commercial conditions in the United Kingdom. It is noted that this t'rade, which was booming about six months ago, is now affected by widespread depression; home and foreign orders have fallen off, and there is much short time and unemployment. Yet the benefit to consumers has been slight. Dealing with 75 items in the drapery trade, the Manchester Guardian shows that the wholesale prices of 41 have advanced as compared with March, while the prices of 16 have fallen and thoso of IB stand unchanged. The advances, it is stated, arc usually more substantial than the reductions. These statements, if correct, mean that although tho British wholesale drapery trade has in little .more than six months exchanged 'boom conditions for those of a slump, its prices during the same period have upon the whole advanced. The explanation appears in the fact that wages and othor working costs are as high as ever. Tho limitations of the contention that the consumer dominates the situation aro here very clearly exposed. A serious reduction in demand will cripple any industry, but / it cannot enfgrco a reduction in prices while working costs remain high, for tho reason, of course, that_ no one will for any length of time undertake production at a loss. No doubt British traders in wholesale drapery would be very glad if they were able to stimulate demand by cutting prices, but this course is not open to them if tho lowering of prices would mean selling on a non-paying basis. It is a truth of wide application that reduced purchasing, while it t may\ bo effectual against profiteering, will only serve where industry in general is concerned to spread depression and unemployment, and that a reduction in prices is only to be secured without injuring general prosperity by in some way cheapening production. This involves' tho consideration, amongst otherß, that anything- more than a gradual fall in prices is to be feared and not welcomed. A sudden and pronounced descent in prices wherever it occurs is bound to occasion serious trouble, because in such circumstances anything like a smooth and easy adjustment of working costs to _ prices is impossible, and tho crippling of industries, which means unemployment and hardship, is bound to follow. It is perhaps less necessary to, emphasise these truisms than to concentrate attention on the means that are available of easing the transition that evidently must be made to new conditions and to prices considerably lower than those at present ruling. Much may be accomplished on these lines, hero as in other countries, if workers will deal fairly and on tho basis of actual facts, with the problem of keeping wages as high as possible.' The starting point of effective action must be a recognition of the truth' thai) although wages are not the only factor in working costs they are very much the most important factor, and that in a time of falling prices the only alternative to a fall in wages (short of the paralysis of industry and consequent unemployment) is to be found in increased efficiency, leading to an increased and cheapened output. Local conditions of trade and industry broadly resemble and are largely influenced by those that rule in Great Britain and the United-States, and it is supremely important in their own interests' that New Zealand workers should give full heed to tho developments that are proceeding in thoso countries. In Amorica, where the change to new conditions is meantime most pronounced, a fall in prices, as tho cablegrams show, has occasioned a considerable amount of unemployment and a widespread fall in wages, but tin's does not cover all the ground American manufacturers, tho New York Journal of Commerce, reported recently, are undertaking a v«ty interesting and important experiment in seeking to see whether by stimulating a largo consumption and keeping output up to war levels
they can succeed in maintaining wages, and yet make it worth whilo for themselves to continue in business. This, tho Journal oj Commerce adds, is
the course of action recommended by the British Labour Organisations' Parliamentary Committee. It is a feasible plan, but only on one condition—that labour mhall endeavour to co-operato and shall ninke it possible for the manufacturer to carry out his programme by giving him 60 large a roturn that he can absolutely afford to pay the.higher scale of wages. There are conflicting reports as to whether labour will follow this plan or trill insist upon its traditional policy of shortened output. If it doc* so it can not possibly continue to Ret the present scale of Trows. If it is willing to exert itself for the good of its own members and of the community it can easily render the new plan of production possible. As a broad statement of essential facts this applies just as well to conditions in New Zealand as to those that obtain in the United States. Here, as there, it is for the workers themselves to clccxht whether tho troubles inseparable from a period of falling prices aro or are not to be. minimised. It is nowadays a matlfer of. common agreement that wages in every industry ought to be as lrigh as possible, but there is no escape from the faot ihafc in a time of falling prices wages must also fall and unemployment must occur unless .standards of efficiency and output arc raised. Turning & deaf ear to the meaningless jargon of agitators and,strifemongers, and fairly considering facts on which most of them aro cjuite competent to form an independent l'udement. .the workers of the Dominion w'fll have no difficulty in realising that their own vital interests, demand that they should co-operato .in every reasonable way to increase and cheapen production.
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Dominion, Volume 14, Issue 43, 15 November 1920, Page 4
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1,346The Dominion. MONDAY, NOVEMBER 15, 1820. PRICES AND WAGES Dominion, Volume 14, Issue 43, 15 November 1920, Page 4
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