WELLINGTON NEWS

Hokitika Guardian, 19 July 1927, Page 4

WELLINGTON NEWS

RIMARY PRODUCTION LANGUISHING.

(Special to “ Guardian ”.)

WELLINGTON. July 10. .Many reasons have been assigned by many people lor the present depression with its unusually .serious vni'umu of unemployment and abnormal number of bankruptcies, and while no one cause can be held wholly responsible for tlio position, there is no doubt but the high cost of production is very largely to blame for the present very unsatisfactory economic conditions. The land and its produce are the main sources of industry in New Zealand, for the primary industries furnish the national income. Primary production under present conditions is unprofitable, or there is so little profit that the producer lias but poor encouragement. It is an uncontrovertible fad that when an industrv ceases to pay nr where the profits are microscopic ii languishes, anti it no remedial measures are applied extinction is inevitable. 'I hat appears to lie what is happenin'.: ai the present time with the tanning industry. lbe cry of the primary prodin ers lor assistance is insistent, and with many the idea prevails that cheap money will ease the situation for them. 'I he cause of their troubles mu-t be removed and the cause is the high cost of production. The producer is being penalised by the high cost of labour, heavy rates ami taxes and high transport and other charges involved in the marketing ol his produce, all of which make up the

cost of production. As the result ol a. 100 high cost of production the whole country is suffering, for thereby the national income is reduced and there is less available for saving to provide for the waste of capital and lor the new capital that is very much needed. Not long ago the Arbitration Court instituted an enquiry into the cost of living, in order to regui'ate the rate ol wages, completely ignoring the elementary fact that it. is the rate of wages that regulate the cost of living. Reduce the cost of production and the cost ol living automatically goes down, lor commodity prices fall with the cheapening of production and the standard of living is thereby unaffected. Everywhere strong and very generous efforts

are being made to help tile unemployed. but this is only palliative. A\ bat is going to happen when the funds provided for meeting the unemployment situation are exhausted 1" It is anticipated that in the spring months there will' be an abundance of work. Certainly there will be the? usual seasonal work that will absorb a certain amount of labour, and so bring a little ease in the unemployment situation, but theft, is certain to lie a serious recurrence ol unemployment. There is very little prospect of produce prices rising, and unless they rise the national income cannot increase, and without such an increase unemployment must continue. We must concentrate on increasing the products of our primary industries and if we succeed in that the national in-

come will expand ami miempi'oyment will vanish, for there will be the funds available for all who need work. MORTGAGE FUNDS. The late-t official figures disclose the fact that funds lor investment in mortgages on real estate are contracting, consequently much less money is being actually lent on tins form ol security. In Ala.v last the number of mortgages registered was 3.703, as compared with ■l.oo- in May hist year, and the amount was £2.978,148 against .C 1,233.261.

There was thus SI!) fewer mortgages registered, and the amount advanced was i’ess by l; 1.2-77.110. Eor the first, two months of the financial year, that is for April and May. the number of registrations was 0,338. against 8.018 in tile corresponding two months or last year, a shrinkage ol l.tiSU. and the amount was £5,3(50.947 against £7.009,770. a decrease of C 2.2! 1. Tito shrinkage was spread over the whole Dominion, indicating a general short-

age of mortgage lands. Taking the figures for the twelve months ended .May 31 st last, the registrations numbered 43,714 against 19,009 in the preceding year, a decrease of 7.7.77. and amount was £37.730,870, against £ 17.080.007. a shrinkage of £9.377.21,. There are several reasons for this con. traction, one being that in the past, year or so the people have not saved very much, but the principal cause up-, pears to be that investors arc finding more and better scope for the investment of surplus funds in the delien-j lures of local bodies and in the better class of Stock Exchange securities, 'there is no trouble involved in ibis, for the securities have ilieir fixed market value, and the collodion of interest and dividend is east’ and free from , anxiety. ;