WEAKNESS UNDERLIES PROSPERITY

Hawke's Bay Herald-Tribune, Volume 81, Issue 55, 27 November 1937, Page 4

WEAKNESS UNDERLIES PROSPERITY

-Piess AssU. *

1 » i Banker's Review of Current Conditions NEW ZEALAND'S POSITION

(B# Tele«rai li-

(Received 27, 8.45 a,m.) SYDNEY, Nov, 26. "Obf present prosperity lias certain underljing weakne'sses. We must do all we can to avoid a recession of business activity," said Sir Thomas Buckland, president of tbi .Bank of NeW South Wales, at tlie annUal meeting of shareholders to-day. "From now on the wise indltstrialist or primary producer will, before adopting any projects for expansion, consider ivliether IiO is in a position to stand up tG any reduction in turnover or fall in ptices," he said. "I counsel the utmost cautiob. Tha outfook for the current season seemS generally satisfactory, but there llave been some rather sharp falls in recent months in some of our most important primary products. This drop is quite serious enough to causo some uneasi* itesSj even though it is due rather to tlie disturbed world situation than any basip unsoundness of tlie marketing position. "A curious feature of New Zoalaiid's present position," continued Sir Thomas, "is the persistence of unemployment to an extent strangely inconsistent with appafent prosperity. Nor has an extfemely large expetiditure upon Public Works been effective in removing this anomaly. Tho situation is all the more disturbing when recurrent coiiiplaihts of a shortage of various tj'pes of labour are remembered. Forty-hOur Week. "Present unemployment, however, may not be of the cyclieal type for which Public Works are the proper corrective, but is rathof of a structural character, ando f uncettain duration. "The Government lias sought to seeure a forty-iiour week througliout inditstry, and bas at jthe same timo raised wages." Sir Thomas stressed that. "these chauges in the conditions under which industry opera|es necesslt*te considerable reorganisation of productive methods, and it may be that wlien reorganisation is complete it will be found that the relative importance of labour ih the productive process has deciined." Not until industry has adjusted itself to the forty-lioUr Week and higher wages will it j be possible to judge what level of unemployttient mhy be expected "under the new conditiohs. COnfidence Lacking. But. Sir Thomas pointed out that "adjustment cannot be completed while a eonstant state of uncertainty prevails." Labour legislation is raising costs of production in all directions, and is placing industry in a very difficult position. "No doubt," continued Sir Thomas, "the Government is relying on the macliinery created under the Indu8.trial Efficiency Act to prevent { any actual industrial breakdown, without realisincr that bo long as costs are , artificially high as a result "of State interterence there cah be no health in the bod v ec&nomic. "The situation has hecome most serious in fhose industries which are subject to overseas competition, and already some firms are dismissing staff." Rising costs are leading to liigher prices, which offset the benefit to the Workers of higher money wages."Sir Thomas stated that the unfortunate position of the manufacturers is due mainly to Government policy and cannot be relieved as long as that policy continues.