WELLINGTON NEWS

Hokitika Guardian, 1 August 1931, Page 2

WELLINGTON NEWS

AN EQUITABLE BASIS. (Special Correspondent). WELLINGTON, July 31. The causes of the present Sepi'ession vary from country to country, and this probably explains the differences of the opinions as to the reasons for the depression. The cause of the depression i‘> Australia and ‘New Zealand ;s different from the United States and Britain, but the economic interdependence oi nations making each sensitive to the troubles ol the others, is reflected in the universal decline in commodity prices. In the last 150 years there have been five periods of major long-term movements in commodity prices, and in those ol marked deflation raw materials have been the first to be affected, with eventually however, a readjustment in the genei a) price level of all goods and commodities. The economic history also shows that a fall in wholesale prices has b.en accompanied by a less abrupt decline in retail prices, but that when once liquidation in the former has ceased an upwavd turn occurs, whereas the decline in retail prices continues until the two sets of prices bear the same l relationship to one another as before the decline. Then, and only then, has prosperity returned. The process of price' adjustment, wh ch is taking plqce the world over, is painful, as we kppw, but once it is over bpslnesa is rid of wany unsound ele. mentis and is probably better balanced than before. In fact it is quite possible to .have prosperity on a low lev p l of prices fts on a high one; what is r e * qiiired in either case js balance between wholesale and retail prices so that all commodities cam be exchanged on an Equitable basis. Especially is this necessary as'between the wholesale price of raw materials and tfie retail price of manufactured goods. The depression began to be felt in this Dominion in the export season ot .1929-30 • wfien prices fell disastrously. This fall unfortunately was considered by most pepple, and the Socialists and Labour, as a short-term recession oi prices, and that there would be a speedy recovery. That recovery failed to materialise, and when unemployment began to expand, and the worker? Insisted upon 'receiving consideration, the thinking portion of the comnipnity realised that we were in for u long-term depjresSioiDafid began to conserve their • resources. With the fall in export or wholesale pficps the domestic trade of the country, began to contract. Those engaged - in l secondary industries, faced with'the necessity of reducing costs, had' no: option but -to lay off workers, thi»s adding to, the volume, of unemployment. Perhaps it would have been better for the country if wages and salaries wre lowered instead of hands weeing dismissed, but jins- could not be done because of the interference of the Arbitration Court, which not only fix. e» the Wftge but also who shall be em* ployed, 'pipforepee being given to unionists,'‘ ' : . ; Thfl oxport season' just closed sees our- producers in a worse plight than after fhe 1929-80 season, for‘they have '“ n'bt tho resources to draw' upon'. We are. relying, , and we caqnpt help it. upon the -pastoral industry alone, which produces over 90 per cent of New Zealand’s total exports. All wealth is based on the soundness of the pastoral industry. In the export season just ended millions of acres of pastoral land have failed to earn running expenses, let alone interest on mortgage, and most of the pastoral land of the Dominion is mortgaged. ,We are. now about to enter a new export trade, and the outlook is not bright, indeed, it is as bad as it has been at any time in the past twelve months. The outlook for wool and meat is disappointing and butter and cheese continue depressed. If there is to be no uplift in prices what is to happen? Obviously unemployment will continue, and perhaps increase, and the dole and the levy will remain, not for one year but for several years. Our farmers have experienced two disastrous seasons and the accumulated losses must be great burdens. Their spending power, already greatly reduced, must suffer further reduction if produce prices remain low. Their incomes have been greatly reduced, but th'eir outgo for rates, taxes and interest remain about the same rates and taxes are increasing. The position will probably necessitate further, drastic economies both public and private. There must be a „big reduction in the cost of Government as a first step. It is not. of much use artifically reducing the rate of interest if the saving is to be swallowed up in increased taxation. We have to get down to a low level of prices, and let U 3 remember that it is quite possible to enioy prosperity on a low level of prices as on a high one. *