Hokitika Guardian & Evening Star TUESDAY, OCT. 26th, 1920.

Hokitika Guardian, 26 October 1920, Page 2

Hokitika Guardian & Evening Star TUESDAY, OCT. 26th, 1920.

THE VICIOUS CHICLE. The rise in the price of butter is going to be made the reason, or the excuse, for an increase in the rate ei wages. This th c operation of what i; known as “the vicious circle.” And il wages go up, we shall have a further taste of the application of “the vicious circle” principle—commodities produced under the increased wages, musi rise still further. Last week in Sydney when the basic wage was raised, it was remarked that the inevitable result of the increase of wages will be an increase in the ordinary costa of production of practically every article and service affected. The increase will not confine itself to what the manufacturer actually turns out in his factory or works, biit will apply to all subsidiary services such as the railways, which, in turn, will have to increase their freights and fares in order to secure a refund of their increased outgoings. It is a vicious circle and will still further increase the cost of living, and more particularly the essentials of everyday life. Tin's means a never ending rise till prices soar to breaking point. A manufacturer in Sydney said he was satisfied that there is only one cure for the evil and that is for everyone to increase, as far as possible, their services to the community, and so ensure increased- production, and thus create a surplus of commodities, thereby causing a healthy competition between sellers who, in seeking for a market will inevitably lower prices.’’ But these arc npt the days when overproduction is rife. Everywhere there is the attempt to go slow. The big strike at Home has arisen because the miners would not agree to a minimum, of production which would have justified the increased rate of wages asked for. They were prepared to take, all they aould get, but on their part would riot guarantee to produce the quantity if coal which would give the margin of safety to the country. As regards tho butter question, the Government Ims erred on the side of favoritism in not placing some export duty on tli e outgoing commodity. The price is high enough to justify the source of revenue being tapped seeing that money is so u'rgently required by the Treasury. Instead of seeking revenue from the abnormal price the producers will receive, the Government is putting a further strain on the taxpayers bv paying out a subsidy of £600,000 to equalise prices for the home consumed butter. The lat e Mr MacDonald had an equalisation scheme in vogue -which was a. tax on exportable commodities to recoup the producers who supplied the

local market at a lower rate than the saleable price outside t!he Dominion. This was an equitable arrangement, and with butter at the high price it is now, the commodity could stand this equalisation tax or export duty. In subsidising the producers to keep down local prices, the Government is taking a step the result of which is economically sound, because by keeping down local

prices the circle rise of prices is not <0 vicious as it might be. If butter went to 2/10 or 3/- it is conceivable that there would be a striking advance claimed in the cost of living, and the all round rises which would requiro to be made would run into enormous figures, far exceeding the £600,000. But tilt source of that subsidy is the

point at issue, and it should come from those who are reaping the harvest if good prices, and not from those who avo being levied upon for the high prices. As kissing is said to go by favor, so apparently is the giving of a subsidy. The Government is generous to the

farmer and his class with every ,class of subsidy, but as lias been pointed out before, do not remember the snwmiller or the gold miner when largess is -o be distributed. This might be some saving to the enlargement of the vicious circle, but- it is not “the square deal all “round,” of which Mr Massey used to boast.

decided to pursue the same course, subject to the approval of the electors, and it is a notable coincidence that the local ibfody proposal should be so strongly 'backed up at this juncture as it is by the Government decision on the matter. The Minister of Public Works in the course of the Statement, spoke very definitely on the matter of plant and the necessity for same. Machinery for a public works policy is of course more urgently necessary than in the case f a local body, and it is remarkable that a country such as New Zealand which plumes itself as occasion offers on .ts progressive spirit, should be so far behind othejr countries in the . general utilisation of machinery for the large vetrkis which ,are going forward all the year round. The more constantly machinery is kept in reproductive action, the greater its economic value and a large Department such as Public Works can operate the plant to most excellent advantage all the year round. This fact establishes the value of machinery for public works though it was emphasised already in the number of local bodies in the North Island in particular which have plants operating in connection with road works and other undertakings'. These examples should go a long way to satisfy the electors of the County of Westland that there is a value and an advantage in utilising mahinery wherever possible, and thajlmtepayers will be missing an opportunity if the present chance is not seized. The cost of the local project is within the ordinary resources of the Council without levying extra rating, so that there is a material advantage to be gained without any additional burden being shouldered. The voting in favor of the machinery loan poll should therefore be beyond doubt.