WELLINGTON NEWS

Hokitika Guardian, 31 July 1930, Page 5

WELLINGTON NEWS

CONDITIONS TO-DAY

(Special Correspondent.) ' WELLINGTON, July 29. The world conditions to-day are singular and yet somewhat similar. It is singular that to-day the whole world should be suffering from an economic depression. It is singular that the wholesale prices have not fallen relatively, nor yei has the cost of living, and this is the position in all countries.

Some blame the New York Stock Exchange slump for the present day economic worries, while others regard the trade restrictions imposed by tariff barriers has obstructed the free flow of commerce causing bn accumulation, of commodities, and especially of raw materials, in the sources of production, but it is hold that if the interchange of commodities were not obstructed by tariff walls there would be no such thing as over production now.

The result of the changing conditions is fully reflected in earnings. Many joint-stock companies—and most of the world’s financial operations are now conducted by joint-stock concerns—have reduced their dividends or passed, them bv altogether. Even in the United States this feature' has been noted. When the Stock Market panic occurred last September and October, financial, industrial;and political leaders in the Unit’d. (States published statements that the trouble was confined entirely to the Stock Exchange, and that there was nothing the'matter, with the industrial situation.

The forecasts and opinions of these leading men were utterly at fault; and the United States is experiencing’a curtailment of trade and increasing unemployment. Some Wall Street magpates are laying the blame of the existing situation at the door of the socalled extractive industries, meaning producers of farm products, oil, copper, sugar and other commodities com-

ing out of the ground. So far iio way has been found to prevent the small farmer or owner of an oil well from producing beyond a point where total production will, balance consumption. It is argued that some time in the future despite the efforts of the Government to protect the individual voting farmer by taking care'of his surplus crops, the small individual farmer is going to pass ou.t of the picture, just as the small bank and individual grot kr, druggist , and merchants are now being crowded out by the large change it in doing business along highly organised lines. The singularity of world economic conditions is remarkable, and the remedies proposed or attempted appear to be similar, at least they appear to be so in the United Kingdom, Australia and New Zealand. In the three countries' the authorities are relying upon increased taxation to bring about the remedy, but wc are assured by economists and sound financiers and business men that ■ increased taxation, indtlad practically, all taxation falls upon industry, and while industry can carry 7 a pretty good load of taxation the increases' recently levied in the three countries makes the burden excessive.

Piling up taxation is just the simplest process but it is hot the best policy, in any event a body of politicians are not competent to deal with the .subtle economic problems of today. There are Labour Governments in power in Britain and Australia, and our own Government is maintained in power through the goodwill of the. Labour Party, ad that goodwill has to be paid for. In neither country has the Government suggested the reduction of salaries and wages which some regard as necessary, at the same time holding that the cuts should begin at the top. The Federal Prime Minister, Mr Scullin, has positively refused to lower ministerial or members’ salaries, and there is no gesture in that direction in the Dominion. Such a- proposal w r ould be unpopular politically, but it lias to come. We cannot afford to pay the salaries and wages of the past with butter, cheese, wool and meat bringing in so much less money. Our costs of production are now too high and the Government could give the country a lead by effecting reductions in the cost of administration. Business people cannot move in the matter for they are bound by Arbitration Court awards, they can only create more uneraplovment by dismissing employees, and that is being done.