Evening Post. FRIDAY, OCTOBER 7, 1938. BUSY "OUT OF TOWN"!

Evening Post, Volume CXXVI, Issue 85, 7 October 1938, Page 8

Evening Post. FRIDAY, OCTOBER 7, 1938. BUSY "OUT OF TOWN"!

Falling external prices; rising internal costs. The former factor leading to less production y on New Zealand farms; and both factors leading to less production in New Zealand factories, where the double pressure of lower-priced imports and higher costs could not be resisted. Both, trends are towards *putting out of business the marginal manufacturer, and the farmer of lands, on the margin of production; so both trends mean unemployment. That is the ! picture which the New Zealand fanners and the New Zealand manufacturers have combined to present to the Government—and that is the! picture which New Zealand Ministers are too busy to look at. They are too busy electioneering. With falling prices and with Government taxation (increased in prosperity!) at a peak, the real national income will fall (say the farmers and manufacturers) unless falling prices are matched by a fall in internal costs. What, then, is to be done about it? Inflation, reflation, deflation, or "insulation." Not one of these; merely procrastination. "A number of tKe Ministers are at present out of Wellington," writes the Minister of Industries and Commerce (Mr. Sullivan) on October 3, and he adds: "I personally shall be out of town all this week."

This was the substance of Mr. Sullivan's answer to the New Zealand Farmers' Union and the New Zealand Manufacturers' Federation, which proposed a conference with the Government on a situation marked not only By price-falls and rising costs, but also by the lowest point the Reserve Bank has yet recorded in sterling exchange funds in London. "Not just at present" but "at' the earliest possible moment" is 4he Minister's idea of when to hold the! conference. Why are Ministers out of town? They are out of town making Socialistic attack on the citadel'of profitable export production and economic common sense— New Zealand's farming populations, from whose industry arises thej London pool of sterling funds. Ministers are busy talking to the rural populations, seeking to take the minds of country voters right off j the very question on which the Farmers' Union and the New Zealand j manufacturers seek urgent discussion. If economic strain says that the time to discuss is now, party political! stress answers: "It is not,now —wait| till we have harvested the votes!" Not falling prices and rising costs, not high taxation and slacking production, is the message Labour is carry-! ing to the country. The message j Labour carries to the farmers is that the farmers can laugh at London and defy world economics because of a Government guarantee of farmers* prices. History will turn on whether the rural voters will swallow that tall story. And that is why Ministers are "out of town."

What "out of town" Ministers arei saying to the farmers and the rural populations is," in effect, "don't worry about this talk of falling prices, rising costs, and falling sterling reserves. Don't look at that at all—look, at! these guaranteed prices, and look at the new racehorse Insulation." Why worry about sterling when there is a local reinsurance in guaranteed prices leading to a commodity pound? As to sterling, Mr. Lee writes in "Socialism in New Zealand" that, under Labour, "New Zealand's idea of profit became human well-being instead of an external trading surplus." And yet Mr. Nash refused to go the whole twopence on butter. Mr. Lee also writes that the guaranteed price is

another step towards an honest money unit, a commodity index for money, an essential to any Socialist society as well as an expedient in this last crisis.

The rural people are asked to forget about rising costs, falling prices, and Mr. Nash's less than twopence, because there is salvation by insulation, and by Mr. Lee's "honest money." The fall in sterling reserves, which is actual, is to be neutralised by the glory of the prospective commodity pound. Will the primary producers, whose industry built up sterling reserves, adopt Mr. Lee's peculiar view of the "external trading surplus," and his extraordinary statement, on page 64 of his book, about "a Labour Government guaranteeing living prices to farmers and wages to workers;"?

Everybody knows that a. New Zealand Government cannot guarantee an oversea market to farmers; the

Government can only promise to pay farmers a subsidy over and above -what the oversea market pays. And;

everybody knows that no Government can guarantee wages to workers unless it becomes the universal employer. This is the kind of philosophy for which the voters are being asked to desert "orthodoxy"—such orthodoxy, for instance, as is contained in the Reserve Bank report:

... in the ordinary course, unless overseas funds are allowed to accumulate when the proceeds of exports— and, consequently, the national income —are at a high level, it would be difficult to maintain purchasing powerinvolving a strain on the overseas position—if and when the Dominion's overseas trade position materially deteriorates.

What the Farmers' Union and the Manufacturers' Federation wish to discuss is the threat of just such a deterioration as the Reserve Bank directors have warned against. The electors have to choose between the Reserve Bank's orthodoxy and the Government's nostrums, and there is no question whatever as to where wisdom lies. It may be, however, that nostrums are easier to sell, hence the selling campaign of Ministers "out of town." If the Reserve Bank directors sitting at their desks are to reach out farther than the New Zealand-wide personal campaign of Labour, it can only be because there is in the electoral mind a reserve of common sense; and that this reserve will be drawn on is the chief hope forj a return of sanity and security to| New Zealand politics.