WELLINGTON NEWS

Hokitika Guardian, 12 February 1931, Page 7

WELLINGTON NEWS

FARMERS AND FINANCE. (Special Correspondent.) WELLINGTON, February 7. When we look hack it seems that the present depression began with foodstuffs and raw material. Wool was one of the first of the raw materials to come

under the cloud and was quickly loli< Jived by daily produce ana meat. With America wheat and cotton were the lirst affected, in Australia wool and and wheat were, the first affected, in Canada wheat, in the Argentine wool, wneat and meat, while in other countries rubber has been the principal sufferer. Farmers in all countries appear to be more seriously affected than industrials, and the outstanding problem of the day both here and elsei where is bow to help the farmers to continue production. If there was any profit in production the farmers would not need assistance, nor would they ask if or it. The question then is how to make production pay. There would . be profit in production if the prices I were higher, but prices refuse to advance, at least so far they have not shown any indication in that direction. Since prices will not move downward wo must look nt the other end of the problem, that is the cost of production, to see tv hut can be done. Jt is obvious that costa can and must be induced. The majority of the people realise this and the people are waiting for a lead. The Australians were told by that eminent financier, Sir Otto Noimeyer, that their costs of production must be brought into some relation with external costs if they wished to avoid the more serious effects of the depression. Australia lias refused to follow the course suggested, and instead has allowed matters to drift. The result is that fanners in the Commonwealth ore in a desperate plight. Mr K. (.!. Theodore, wiiom Mr T. 11. Seullin seems to regard as a wizard of finance, has evolved certain financial schemes which at the moment are being considered by Sir .Robert Gibson, Chairman of the Commonwealth Rank, for the success of the scheme is said to depend on the amount of assistance that the Bank can give. The essential feature of the scheme is inflation or, as it is termed “judicious release of credit.” The real remedy is the reduction of costs, hut the Federal Government is determined not to help in this for the 10 per cent reduction in wages sanctioned by the Arbitration Court is being opposed by the Ministry. There is no doubt a great deal of loose talk | concerning credit and finance both in j Australia and elsewhere, and some politicians regard it as a political problem, to he bundled by politicians from a party point of view.

In the last analysis credit is based oil value, plus confidence, and Australia has neither the one nor the oliit't. The Theodore plait of finance lias lib chance of success, on the contrary it is more likely to make the position worse. Australia provides us with the example of what we should not do, and it is to he hoped that our politicians will have profited by Australia’s fail-

ure. Our economic conditions have become considerably worse since the calamitous earthquake of Tuesday. It must not he forgotten that two wealthy towns have been razed to the ground, nil 1 the harbour at Napier no longer exists. Dealing with the latter first it must he obvious that the'debt of the Harbour Board must lie taken over by tile Government, for the resources of the Boaid were obliterated by the earthquake. It cannot hope to recei-e harbour rates or harbour dues and the interest burden must he assumed by the State. The State will also ho minus the income tax wluc‘l is now payable, which would otherwise he forthcoming from Napier and Hastings and further the State expenditure is suddenly increased by providing for those who have lost their all. There are many more serious economic factors affecting the people of the stricken towns. Ttie boroughs have ceased to exist, hut their debts and obligations remain, and if they are to ho boroughs again time and plenty of money will be necessary and it is apparent that the towns cannot carry any load of deot. The Earthquake tippears Lo have reduced the whole of the people to one dead level—-nil have lost their all. It is a calamity and economic tragedy unprecedented in the history of of New Zealand, and it will take years of wise administration and strict economy to straighten out things. Material wealth has been destroyed and the closest co-operation and great sacrifices on the part of the whole people is necessary. I