WELLINGTON NEWS

Hokitika Guardian, 20 November 1928, Page 2

WELLINGTON NEWS

BIG DEMANDS EOR CREDIT

[Special To The Guardian.]

WELLINGTON, November 17. The demand for credit the world over seems to be exceptionally strong, but this is rather more apparent than real. It must be remembered that during the four years of the war an enormous amount of the world’s wealth was squandered and dissipated .in .smoke,, and when the conflict ended the belligerents found themselves heavily in debt, except the United States. It was perhaps unfortunate dor the world that it should have found the greater part of the world’s wealth concentrated in America, for the traditional policy of that country is one of aloofness and selfishness.

The United States has certainly helped European countries fo stabilise currencies, but impoverished Britain has done more. The demand for credit on the part of states and municipalities has been very large since the waxperiod and have had first claim on the available credit, but industry and commerce have not been able to secure all the credit necessary to carry on, and this was inveitable because the volume otf saving has been within small compass. There again the purchasing power of the peoples of Europe has been very greatly impaired as the result of the war, and while they are in need of many of the necessaries of life, they are obliged to be content with the minimum because they cannot afford to buy what tlTey want. Manufacturers are unable in a host of instances to reduce prices oH‘ commodities because the costs of production approximate to the pre-war rates. As 90 ner cent of produ* tion costs is wages it is obvious that there must bo a drop in these before there is a drop in the costs of production. An attack on wages is unpopular because the workers confuse the standard of living with the wages scale. This is one oT the big obstacles in the way of adjustment. A drop in wages will not affect the standard of living provided that commodity prices recede at the same time as no doubt they would. The reduced wages would thus purchase the saipe measure of comfort as do the high wages of to-day, perhaps more, and the standard of living would thus remain the same. r lhe scarcity of credit on the one hand and the high cost of production on the other are in tiie main responsible for the unemployment that exists the world over. It is the basic industries in Europe that are depressed and necessarily the raw materials of those industries such as coal and iron and other industrial metals, cotton, wool, artificial silk, and even jute. Repeatedly there have been forecasts of trade improvement in Britain, but the fact shows that the number of the unemployed is greater now than it was twelve years ago. There has been an appreciable increase in world population during the past five years and the expansion of industry and commerce has not kept pace with the increase in population. This is one reason why there are so many unemployed, furthermore, the basic industries continue depressed. It would be idle to deny that there is a vast amount of work to be done in every country, but money is needed, and money is not so readily available. Capital can only be got together by saving, and saving is difficult in these days Of little work. Many countries are endeavouring to build up their industries by raising high protection walls in the mistaken belief that a country can become self-contained. The effect of this protection, while benefiting manufacturing industries us directly harmful to the agricultural and pastoral industries, especially where farmers are obliged to market their produce in outside markets. However, the fact remains that credit is scarce and everywhere strenuous efforts are being made to meet the situation. The first and most imtant demand that was felt in most countries was housing the people, and special efforts had to bo made to meet this demand. It has been the boast ol the British Government that it has built over a million residences under the housing scheme. It is only Governments that have helped in this matter for many private companies have been formed to extend credit. In New Zealand several cooperative building societies, and for the small man these are very lielpfu • For every £IOO required one share is taken on which Is per week is paid for 15 years or until every member or the group gets his loan. Every alternate £IOOO is drawn by ballot, which constitutes a free loan. The intermediate loans are sold > auction at an upset price of £2O for every £IOO borrowed. Assuming that a man buvs a £SOO loan by auction and pays not £2O, but £35 per cent, the total amount repayable by him would be £SOO plus the premium ot £175 or in all £675. This debt will be extinguished in 12* years by fortnightly payments of £2 Is 9d, or say U 0s 10-id per week. With rents at 80s to 50s per week for small cottages ie above scheme lias an appeal tor the small man.