FALL IN PRICES

Hokitika Guardian, 23 May 1921, Page 3

FALL IN PRICES

(.Mercantile Gazette)

A period of tailing prices has set in, aiid this is variously described as a “slump,” “financial collapse,” “financial crisis,” “monetary tension,” and so forth, but whatever term we may apply to it the important question is how. long will the slum]) last. In the opinion of some people there .will he a revival presently, others think it may be a year or two before a change is manifested, while others again candidly admit that they are unable to veiituio upon a forecast. Those, who take the view that the period of falling prices will he of short duration are no doubt basing their opinions on the experiences of the past twenty years. There was a very severe world crisis in IH9I-94 when there were numerous bank failures in Britain, America, and Australia. It was in 1894 that the Government had to come to the assistance of the Bank of New Zealand; Conditions were had for about two years, hut in 1896, an improvement showed itself which grew in strength. There was a minor crisis in 1907-1908, when there were numerous hank failures in the United States, hut broadly speaking there was steady improvement since 1896, during the war period and up to about the middle of last year there was a boom, and now prices are falling. The boom during the war was due to inflation of the currency. The commercial crisis of 1891-91, and flic hitler one in 1907-8, were due to inflation ot credit for production, but during the war it was inflation for destruction, and therefore the present slump cannot lie judge! by the other two. At the Technical Schools Conference held in Wellington last week, Mr G. d. Harks, Director of the Wanganui Technical College in referring to this subject of falling pines quoted the history of changes in t. 1 e level of general prices its summarised b v living Fisher in his “Purchasing Power of Monev.”

The changes in the last century were as follow

From 1809 to 1819 prices fell as from 157 to 04.

From 184!) to 1873 prices rose as fro 64 to 86.

From 1873 to 1896 prices tell lr 86 to 69.

From 1896 to 1912 prices rose alnio-t

2~) per cent. During Uu‘ war periods, as wo know in New Zealand, prices advanced from ■SO to 100 per cent.

It would be sheer folly to assume that falling prices will last for two or three years or any such short period. It can he seen from the above that prices tell for a long time after the Napoleonic wars, and even after the Civil War n the United States it was 14 years before there was a recovery in values. A period of falling prices is a time <9 trouble because of the difficulties ot readjusting the relations of capital and labour, of employer and employed. W" ; shall of course learn some wholesome ‘ and much-needed lessons from the trials that must he endured. j Those lessons are being learned in ; ‘., it in, the United States and other | important countries. Strict and rational I economy in the administration of tin* j

Government must he insisted upon. ' Expenditure of money on political jobs *

In a 1 tch votes must cense, and 1 V Go-

vermncnt must sever itself from commercial and industrial affairs. T ! e control hoards, prohibition of imports and exports of certain classes of goods, and such bureaucratic interference with commerce and industry must cease. It is perhaps only possible in New Zealand to witness the spectacle of gas cookers and seditions literature placed on the same footing on the list ol imports. Just now neither can he imported. To import a gas cooker now one must obtain the consent of that August body known as the New Zealand Board of Trade. According to Professor Pringle, pro-

lessor of economics r<t the Otago University, “Among all the surge of now ideas tiiat had been rotised since the war, two seemed to him to he the most profound and powerful. The first of these was a new conception of industry. We had reached the conception in England that the spheres of polities and industry were distinct, and that the host results were obtained if the politician attended to his business—managing National affairs—and the industrialist attend to his business—making his business a success,” That is what we need in this country. We want the politicians to attend to their proper business, and if they did that the Government expenditure would be considerably less than it is and the taxation would be less also.