WELLINGTON NEWS

Hokitika Guardian, 17 March 1926, Page 4

WELLINGTON NEWS

AT LSI IB 00AI ECONOAIISTS,

(Special to “ Guardian.”) WELLINGTON. March 15. Ever since the close of the war there has come to light. t|itite a handsome ero|> of self-stvlecl economists, hankers and financiers, and if they are not troubled with a growth, they arc certainly prolific of schemes for stabilising markets, for li mincing enterprises at low rates of interest and up to the limit or very nearly so. of the value of the security, and they become very annoyed that banks do not adopt their views and make a mess of things. There appeared in one of the 'Wellington papers an article running into several columns under the caption of •• What is a- reasonable price lor wool ?’* The writer takes a basis of his calculations a farm of 1.01)0 acres capable of wintering If sheep to.-.the acre which lie values at Oil per acre. The farmer reriuires m all C 1.1.000 to liny the land and stock it. and all the capital he possesses is £2.000. or just about Id per cent of the capital required and must borrow 85 per cent. The question arises why should a

farmer expect to he financed to the l extent of 85 per cent of the value of his security, while others cannot got more than 00 per cent. I he* Public Trustee will lend up to 00 per cent, on Government Valuation. If can be seen that a man who takes Tip a mortgage load of 85 per cent is looking for trouble, for with one had season lie is down and out. The facility with which farmers have been able to pile up mortgages have been their undoing, for they have been tempted to give more for the land than it is really worth. An authority when asked for an opinion scouted the idea that land wintering 1 f sheep to the acre* was worth Cl I per acre. In his opinion £7 was the outside value, and maintained that, land values in New Zealand are still inflate*!. Hut the Govern ir.cn I valuation of such a farm would he T 9 per acre, and that of course is the opinion of some people in conclusive evidence of its value. How

is tin- Government valuation arrived at? Not on the productivity of the land, bni because sales in the neighbourhood have taken place at above that figure. If tlie writer placed a correct value on the land and insisted that the farmer should provide at least 40 per cent of his capital, and on the basis of calculation farming would pay the average fanner. THE REASONABLE PRICE.

After making elaborate and detailed calculations based on the inflated value of the land, lie estimates that wool should average lOd per lb and goes on tn say:—“’file average price of fleece wool must lie 21d to admit of the

lower grade wools—bellies, pieces locks, etc., working out to an average of L9d per Hi. The farmer’s produce is one of the lew things still auctioned. The Americans produce benzine but they don’t auction it ; they lix the price, which we pay without question. The present-day method of selling wool is a lineal descendant of the ancient game of pitch-and-toss. We all shear about the same time, bundle the hales into the nearest seaport, and trust to luck ; and see the buyers and speculators scramble for it with " perversity we make' little effort to understand.” This seems to be a very childish presentation of the ease. It- is not merely the price of benzine that is fixed. Every retailer, every merchant lias fixed prices for the commodities lie sells, and we nay I lie price if it suits or spurn it. 'flic sale of wool by auction may be a lineal descendant of pitch-and-toss, but it is the fairest and most convenient way of marketing the product. Last year the buyers paid tbe average price of lOd ami more for wool and lost heavily. Bradford’s losses last season have been estimated at C 10.000,000 and Bradford is not anxious for a repetition. There is a niisiakeu notion that buyers and sell'-rs can lix prices of comnioditie;— prices are iixed by the ultimate consumer who creates the demand, if he has ample purchasing power trade will be good, for the demand will be good, but with restricted purchasing power, slackness in trade follows, and tlm only way to move goods then is by reducing prices. The farmers should ask themselves if there is no way they can improve on their methods of farming.