WELLINGTON NEWS

Hokitika Guardian, 31 May 1929, Page 2

WELLINGTON NEWS

TO CHECK PRICE FLUCTUATIONS.

i (Special Correspondent.)

WELLINGTON, May 28. There is bound to be a good deal of hard thinking and warm discussions on the part of economists the world over in respect of the new proposals for checking theSffyctiiAtions of world prices, and so regulating :the cost of living put forward in the Monthly .Bulletin issued in April by the International Institute! of Rome. '■ F . The authors, Messrs David' Ferguson and J. K. Montgomery, heads/ of the Economic Bureau*, of that institution, claim to have proved that the world general price level is affected not by industrial but by. : agricultural prices, J determined in turn by agricultural

production; and,’ from'this, they arrive * at a solution of price stabilisation based on a formula which they have discovered showing a very high correlation between the General Price! Index and the price of wheat. Not only does their thesis include a revolutionary asspciation of gold, and grain as world standard', with wheat as the establishing tactor* but the existence is shown %£• jv'honnai l level « agricultural prices.vdttmht&ting/yet’ em tirely distinct f lot the general level ed prices as measured by all existing ' index numbers. The theory that wheat prices could provide a standard .beepiadvanced in the past and combatted, but the value of the new proposals is, it is said, due to the Tact that they are based on mathematical data. . . ... The formula,, according to thbj jß.ome' correspondent of the “Morning Post,” has been reached by working out the respective wheat prices and the general index prices (based on' the costs • of 400 commodities) in , three . countries over a period of 19 years, and it is claimed that the wider the national fields of statistical calculation, the more accurate the international form-

ilia becomes. The authors denounce the existing gold standard as iiii ihbThodof obtaining permanent iaiferuaticnal stability, and urg6 , 'th l rii, < 'udU]e'fife ‘idea of applying (jvVh'eat prices as a standard is new. Sp .it?j a'ppjjfat^yi, g?, {syo- t cated by them’/it is also in fact a justification of the ancient custom of basing wages no corn prices. They show how an agricultural formula would assure stability, and how, incidentally, it should lead to a considerable adVanee'in 'price v *Torecasting. Turning to wheat itself, the authors give a.formula for a pre-war period, whereby the farm price of wheat can be roughly competed, and claim that it is not impossible that a method will,: be found in the near future for forecasting national or world wheat crops. They see that if present omic conditions continue, a sh(i£rj) v fallf: in the world market pricg/TSveLof. agricultural production, they hold it essential tem of control of tions should be the world. Tl l oy would notvlitit'uni 1 y dispense with gold: asj.af. stanoayd. ele;ment, but the^ : tion into all countries of an elastic gold cover for the note issue, the movements of wheat would ,be , regulated (within limits according to national; conditions) by a world index of agricultural production.

LOSSES IN RAILWAYS

According to the Minister of Railways, the New - Zealand Government railways will show a loss o<f apparently £1,000,000, but there is nothing surprising in that for deficits w'ith Gov-ernment-owned railways as with Gov-ernment-owned ‘ shipping lines. Interesting figures of dncome-.-and*expends ture in respect of operations of Government railways in Australia and New Zealand are disclosed in an article on the subject appearing in the Australian Insurance and Banking record.

Gross revenue for both countries in 1927-28 was £55,922,128, and expenditure amounted to £45,100,386, net earnings being £10,821,742. As interest involved a sum of £17,003,251. a deficit of £6,185,509 resulted, cl n 1926-27 the deficit was £4,875,775, and in 1925-26 it amounted to £4,170,646. Capital represented in the railways undertakings of Australia and New Zealand in 1927-28 was £368,965,581, as compared with £219,470,139 in 1913-1-1.

Excluding Government tramways gross earnings of the railways in the Commonwealth for 1927-28 were £47,887,158, against £48,301,100 in -the previous year, while working expenses absorbed £38,415,263, net earnings being £9,471,895, against £lO,137,621. Interest required £14,892,384 ni 1927-28, and £14,468,516 in the preceding term, so that the deficit last year was £5,400,489, and, in the previous year £4,330,895. * Capital expenditure on railways in Australia at June ,30th last was £317,778,205, compared with £310,032,373 at the close of the previous financial yerfr. Revenue- of the New' Zealand railways for ,1927-28 was £8,034,970, expenses, etc. £6,685,123, net income being £1,349,847 against £1,498,553 in the preceding year. As interest amounted to £2,130,8G7, the deficit was £781,020.