DANGEROUS GROUNDS

Hokitika Guardian, 8 July 1932, Page 6

DANGEROUS GROUNDS

STABILITY OF PRICE LEVELS, REASONABLE RATHER THAN HIGH. WELLINGTON, July 7. “I know I am treading on both dangerous and idealistic ground, m the law of supply and demand, ‘both in -roods and money, must operate naturally, but-, stability at reasonable rather than high price levels is one of the urgent iieeus of the fanning community at the present time,” declared Mr Colin Macintosh, in his presidential address to the Farmers’ Union Conference to-day. “Violent fluctuations in the market values of output, due in the main to the British market being the dumping ground .for the surplus production of the' rest of ‘ f ; the world, '■ creates -too much uncertainty: in the minds of cui farmers, with the consequent result of retarding production. The resulting lack of confidence in-the future is -adversely affecting land and stock values and so restricting banking and credit facilities upon which the fanning community depends. In oidei that farming may be carried on economically and prudently, a jfarmer should f get -a, clear view of _a years operations in advance. Instaoility of markets and price levels -are nqt. conductive to this.

“The two factors that determine ,price are goods and money. There can be.-no change in the general Hovel of price if .both these factors increase ,or decrease at the same rate. v “We should seek just as earnestly to avoid deflation as-vve should To inflation. ‘By'inflation I mean an expansion of credit that eventuates Hi a rise of ‘the general price-level; and by deflation, a restraint of credit that -eventuates in a fall of -prices. Good economic and credit policy will endeavour to steer a middle course between these tvvo dangerous shoals. “Conditions are not sufficiently attractive to induce holders of money, to invest their funds in business ventures. The risks are too great, conditions are too unstable, and the prospect of adequate return too insecure, lit seems to be almost impossible for .prices to be stabilised by' monetary manipulation under these "Conditions. .