WELLINGTON NEWS

Hokitika Guardian, 7 May 1929, Page 2

WELLINGTON NEWS

FALLING PRICES. / ‘ (Special Correspondent.) WELLINGTON, May 2. Economists the world over agreed that we have entered a period of falling prices, and if we look back on the immediate post-war period when boom times were experienced temporarily we can see that there has been a recession of prices, but the drop is likely to be accelerated in the near future. There are a good many people, and among them not a few business men who cling tenaceouslv to the idea that the war changed the whole mechanism of economics and that markets must be viewed from a .new angle. There is no doubt that inflated currencies, high tariffs and so forth have given to the world new economic problems, but their solution must inevitably conform to economic laws which are unalterable. But to revert to falling prices, the past month gives an indication of this movement, but the variations in a single-month cannot .be relied upon altogether as a safe guide. About the middle of March all the base metals, such as copper, spelter, tin, and lead, appreciated considerably. Indeed the rise in copper and lead in London was described as sensational, for such a movement had not been experienced for jforty years. On the single day of March 18th copper advanced £7 ; 13s 9d • a ton and touched £97 11s 3d, liThis ; was,said to be due to American influences, which is very probable as American production of the red metal is large eriough to give that country control! of the tharket. Tt is, howevfer, hoped that in about two or three years’ time Britain will be free of American domination because of the discovery of extensive copper lodes, in Rhodesia. Copper rose like a rocket but came down like a stick, for it advanced from £7o'at the beginning of the year to £97 in mid-March, a rise of £22 per ton, but by April 25th it dropped back to £77 a fall of £2O since the middle of March. At the beginning of last month lead was quoted at £26 per ton and by the end of the month the price dropped to £2-1 a fall of £2. Spelter also receded £2 per ton during April, falling from £27 to £25, and tins dropped from £220 to £2Ol, a shrinkage of £l9 during the month. Firmness in the base metal market is a good rather than a bad sign, for activity in this maihet means brisk business in the heavy industries, particularly engineering. At, one time the price of pig iron was a fairly reliable barometer 'of Britain’s domestic trade, but for some reason or another pig iron' is hot cabled to the Dominion as formerly.

The base metals are not the only ones that have registered falls in prices during April, for certain commercial raw products have been similarly affected., During_the month cotton 'fell Jd from'iOidj to 10d per lb. and fine hard Para rubber from 12-Jd to ll’.d per lb. Other grades of rubber foil ' correspondingly, would-, appear that plantation rubber at just over 9d per lb is' barely 'covering .costs of production. ; ii&vk . . , Cotton and wool too is likely to lip menaced by a new fibre, for according to a London financial paper a new. plant, evolved by a British scientist, and now being tested, yields a serviceable fibre, besides cellulose for papermaking, and 1 the seed ' can b.e converted into cattle teed-like cotton seed. Jute has declined from £32 to £3O per ton during April,, copra-from £22 5s to £2l 15s and linseed oil from 5s to £29 per ton. Unfortunately a comparison cannot he made for New Zealand hemp for there have been no quotations for this product during the past few weeks. Bradford tops, which furnish some guide to the state of Yorkshire, were recently reported as meeting a depressed market' and such a pessimistic note is generally struck just prior to the opening of the London wool sales. The actual quotations of last month show that, merino counts declined, 64’s receding from 43id to 43d and 60’s from 41 id to 40J-d. Halfbreds and crossbreds were practically unchanged. Dairy produce' has been fairly steady during the month. New Zealand salted butter Kas ruled steadily at 1635, but Australian butter declined bv 2s 6d per cwt to 157 s 6d. Danish fell 5s to 163 s and Polish _ Is to 151 s. Danish butter is selling below New Zealand, which is not the usual feature of the market and is due to the fact that the Danes cannot market their butter in Germany quite as freely as in the past and therefore more is being sent to England. Cheese, too, has been fairly steady although prices are comparatively low. A bright 1 feature so far as the Dominion is" concerned is the improvement shown in the' best grades of New Zealand frozen mutton and lamb. Porkers and baconers also show a rise m values. The regrettable feature of the meat trade is that we are falling out of the hoof trade, for there are no quotations for New beef. STATE IN BUSINESS. WELLINGTON, May 4. There are some businesses which are in the nature of public utilities that the State should and must undertake, such, for instance, as the Post Office and a Ifow others, but outside this the State should not enter into business. .Mr B. E. Murphy, Professor of Economics at Victoria College, is critical on this point, and in address to the branch of the Australian and Now Zealand Economic Society the other even,ll fr fie dealt trenchantly and fearlessly with the? subject. There can he no disputing his contention that Parliament. politicians and officials are selected for political qualifications and amenable to political considerations.

Officials have not the mentality of the business man, are not actuated by business motives or amenable to business opinion, nor do they suffer the nemesis of business failure. Political bodies are not constructed for business functions nor trained for them. Mr Murphy is definitely of the opinion that political and economic areas do not coincide.

State or municipal trading can .never thrive. The Wellington City Council has a monopoly of supplying the city and suburban residents with milk. The charge is a fairly stiff one, and this milk department claims to have made a profit, which it no doubt did, but then it has no competition to face, it can charge the consumer any old price, and above all it does not pay income tax or city rates. M ith all these exclusive advantages it would be surprising if the department did not pay. This department should not lie relieved of taxation and rates, for in relieving it the burden is put on the shoulders of the taxpayers and ratepayers. If the City Milk Department did not hold a monopoly private enterprise would soon enter into competition, undersell the Milk Department, give* as good a service and pay rates and taxes. There is no valid reason why the municipality should not undertake such business as supplying the residents with milk, but it should he treated in the same way as a private business would and bo called upon to pay income tax. 11 municipal trading enterprises were obliged to submit to taxation there would he fewer excursions into the realms of business. The obstacles to the success of State and municipal enterprise is that electoral considerations frustrate all attempts to introduce strict business methods, so. that there tend to be swollen labour charges, reduction for prices of services at the bidding of popular clamour and failure to build up reserves. Everyone will agree with the Professor in his dictum that industry cannot ho managed successfully on lines of democratic' politics, hut State industry must necessarily lie amenable to instructed popular opinion. White elephants belonging to the State are never killed, whereas in private industry they are slaughtered in the Bankruptcy Court. According to the Professor, State -industries should cover costs in the full sense, and these costs are operating expenses, interest, on capital, repairs and maintenance reserve to cover fluctuations, reserves equivalent to their proportion of 1 rates and taxes, provision , for extension ol service, provision for value ol services furnished, free or under cost by other departments of State, an allowance tor the damage! they inflict on private industry. This, though not strictly a “cost,” is part of what 'State industries cost the people, and provision for the privileged position in competition of a State undertaking, for example, exemption from Labour laws, privileges in collecting accounts and privileged position in litigation. ■ An efficient audit of State enterprise is desirable, but Proiossoi •Murphy believes that the better alternative is to keep the business man and the politician in different spheres and let thorn .balance each other. With State industry the business man, now an official, ,is more powerful than ever because he has the State with him and not against him. “4 he ..future seems to indicate that the best policy is -private enterprise subject to social control by regulative commission. Hostility and destructive competition - between public and- private utilities are to he deprecated. In any case purely trading and commercial functions are unsuitable avenues for State activity.- Natural monopolies are the only line where success seems promising. Rigid accounting would show that almost all State undertakings of a purely industrial character are run at a loss, but this does not apply to financial services.” The Board of Trade Act passed by the Reform Government .is unequivocally condemned.