INFLATION DANGERS

Hokitika Guardian, 25 May 1932, Page 3

INFLATION DANGERS

FARM COSTS AND SELLING PRICES

REMOVAL OF DISPARITY

AUCKLAND, May 21. Present-day economic problems were dealt with by Professor H. Beishaw, of Auckland University College, in a lecture to members of the OnehungaManukau Chamber of Commerce. Professor Beishaw said the problem was to bridge the—disparity between farming costs and farming selling prices, , and until this was don e one could not expect unemployment to be materially reduced. People in general were quite prepared to face a reduction of costs as it applied to others, but not its it applied to themselves, and it was regrettable that the community had not yet.'realty come to grips with the problem as had been done in Australia. ' The', problem Oi removing the disparity between costs, and selling prices by raising the Latter involved an increase jn Credit'for the whole world, and not for -New Zealand. In fact, with regard to 'proposals to increase currency circulation in New Zealand to the extent of £10,000,000, he.stated that even now there was nothing to stop the banks from increasing the note circulation from the present £6,000,000 to three times that amount if required, but the issue was determined by the requirements of business. A local increase in circulation by th© suggested additional issue would have a. tendency to raise prices in general, but it would not raise export prices, and its effect would probably be only temporary, as the issue would soon be in the banks again. On the contrary, it would make it J " worse for the farmers "'as their costs *?■ would go up, and the increased circulation would cause more to be expended on imports. More credit in itself would he of no practical vain© unless it facilitated increased production at a profit. A very small inflation might do no harm, hut a substantial inflation would always be difficult to control. Inflation did not remove the root cause of the * trouble.