The Guardian And Evening Star, with which is incorporated the West Coast Times. TUESDAY, AUGUST 21, 1926.

Hokitika Guardian, 24 August 1926, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. TUESDAY, AUGUST 21, 1926.

THE BUSINESS BA 150. A JETER. The Department of Economics at Canterbury College, in the August bulletin issued under the auspices of the Canterbury Chamber of Commerce, reviews the possibility of trade returning to normal conditions. In the course of the comment it is mentioned that at the present time the trend of prices in all the leading countries is slightly downward. The depression through which New Zealand is passing is being severely felt in Britain, and has affected America as well. The depreciation of currencies and exchanges on the Continent, too, is exerting a downward pull on the general level of prices. This is neen in the effects of the recent fall of the franc, which lias withdrawn an important group of buyers from our wool markets. These, however, are likely to he passing effects. There is much evidence that prices are settling down at levels which must lie regarded as normal under post war conditions. At the prose iff time, despite the very wide divergencies that followed the war, our own import and export prices stand at almost the same level, export prices in May, 192(1, being .17 per, rent, and import prices (11 per cent., above the prewar level. It is reasonable, therefore, to conclude that the remarkable fluctuations of the post war years, which did so much to dislocate industrial organi- j Ration, are over, and that the world is returning to more normal and stable conditions of production and exchange. The return to normal and stable conditions in New Zealand means that local conditions of production must be adjusted to the world price level, which is not above CO per cent, higher than the pre-war level. In some cases this lias been done, but in* many eases much remains to be done. Apart from the insecurity engendered bv the interferences of public authorities in the realm of business, the chief obstacle to increased production is found in the disparity between the costs of producing and marketing goods, and the purchasing power of markets where these goods are sold. The conditions of our external markets are beyond our control. The purchasing power of our local markets depends mainly on the inconu) received from our exports, and the only sound method by which we can increase that purchasing power is by producing a' greater output, which "ill increase our income. But in order to market a greater output, market conditions must he met, and they can be met only bv sueh a lowering of local costs as will enable our markets, both local and overseas to absorb our increased output. The Danish plan, which is also the plan of many of the most successful American businesses, is, in the long run, the only sound plan. It consists in concentration upon a high level of production at a low cost, and in meeting the market at all times. At the

present time many legacies of the war years stand in the way of cost reduction. Soma business's are over capitalised ; overhead expenses, and particularly the expense of distribution arc unduly high; there are still many trade associations aiming at the maintenance of high prices by means of trade restriction, where much more is to be gained from competition and trade expansion at a lower price level. The responsibility for reconstruction and for the reduction of costs to a level which will enable market conditions to be met must necessarily be borne by those who undertake the task of business organisation and management. The strongest argument for private enterprise is that it entrusts this task to those who stand to gain or lose most directly by the success or the failure of business. They cannot escape this responsibility how. The recovery and expansion of production and trade must depend upon improvements within business itself and upon the efforts of those engaged in business; Tittle help cun be expected from outside. And these improvements aimost likely to result from the application of internal economies in production and marketing, from better technical organisation, fuller (scientific knowledge, the steady accumulation of capital, the increased efficiency of labour, from co-operation, good-will and good management.