WELLINGTON NEWS

Hokitika Guardian, 24 March 1930, Page 7

WELLINGTON NEWS

AGRICULTURAL SUBSIDIES (Special Correspondent.)

WELLINGTON, March 21. With a Labour Government in power in the Comonwealth there is a roviva of the demands for increased protect ion, subsidies and bounties, compulsory pools and price-fixing locally. These are at variance with economic law and do not help but hinder inter national trade. Long ago the Econo mic Conference at Geneva showed thai tiie depression in industry with its disastrous reaction on agriculture was directly caused by high tariff wall which crippled the free flow of normal trade and commerce between the nat ions. The 'Tariff Truce Conference at Geneve held a few days ago was for the expressed purpose of calling a hall on the building up of tariff barriers and while this conference is being held Australia is engaged in clapping on more duties. Pools and whatnot are just protection under different names and their effects in the end are the same as those of high tariffs for they restrict the free flow of international trade. All future human progress depends entirely upon an industrials ed and more prosperous agriculture, but bounties, subsidies and tariffs will not help to bring about that prosperity. It is generally recognised that • be farming community as a whole has not kept pace with the new efficiency in modern business methods and scientific management; and obsolete but tenacious conversatism has narrowed their view of the immense possibilities offered by modern machinery on the one hand and the value of co-operative selling on the other. It must be ad mitted however that both in N.Z. and Australia the tendency is to make greater use of farm machinery, but if is a question of whether the stage of scientific management has been reach ed.

In Australia there is a suggestion that there should be a bounty of 6c 1 per lb clean content of wool, and a revolving fund of £5,000,000 is anothei proposal. With respect to wheat it is proposed to form a compulsory pool and fix the price to the local consumer at 2s to 3s per bushel above the world price. That this is unfair and unjust to the people of Australia does not seem to have any consideration. The trouble with all these schemes O. tariffs, bounties and subsidies is that once imposed it is very difficult to remove them or even modify them for vested interests spring up and it is very difficult to overcome them. The present depressed state of agriculture and of industry is the natural out'come of interference with economiclaws. Strong efforts are being made to circumvent the laws of supply and demand. A study even a cursory one of the positidh puts one in possession of the causes that havt* produced the present distressing situation. Take the case of wool. The supply of this commodity has increased in recent years, Formerly Australia was the main source of supply of merino wool, but is not so now for South Africa is a strong competitor. 'The most import ant branch of farming in the Union ol South Africa is that of rearing sheei for wool. This particular industry has been established for a great num ber of years, it has however, grown rapidly during the present century, foi whereas in the census of 1904 the num ber of woolled sheep was returned al 11,820,633, by 1927 the figure had in creased to 36,114,138. Practically tin whole of the clip is shipped abroad and between the years 1909 and 1928 exports of wool both scoured and in the grease rose in volume from 130,763,00! lb to 253,507,001 b, and South Africa merino wool is of very good quality and quite equal to Australian. The in creasing production of crossbred woo in the Argentine competes with the X.Z. product. Australian wheat is only a fraction of the world output, the hulk of the world supplies being produced in Canada and the U.S. and in both of those countries strenous efforts to hold up the prices have proved futile. Supplies have increased of woo 1 and wheat as well as of other commodities but prices would not have fallen quite so badly had European nations been in a better position to purchase. There is a great deal of unemploy ment in Europe and increasing and protracted unemployment has resulted in heavy municipal deficits in Germany The purchasing power of the peoples of Europe is still below the pre-war level and that being tlie position how are they to pay post-war prices for good ? Then again with the object of stimulating industries and keeping money in the country, as the phrase goes, most countries have built up tariffs and so restricting trade between nations, and there is the further fact that iinssia is not able to pull her weight in international trade, and this is a serious handicap. These are briefly the causes of depressed industry and depressed agriculture, and this depression cannot he remedied by pools, bounties and subsidies which are only helping to mnko the position worse. Tlie position will of course right itself but that will take time. Many producers are making themselves acquainted with the position and such poducers are meeting.the market and at the same time are exploring the '-nditions and are looking for ways and means of reducing costs of production. This is probably the key + o the situation.