NEW PRICE LEVELS

Rotorua Morning Post, Volume 2, Issue 409, 19 December 1932, Page 4

NEW PRICE LEVELS

The farmer to-day is a good deal more logical and philosophieal than those who stand forth in the limeligiit as champions of J his cause. Some who have lent | money injudiciously regard the ! processes of deflation with anxi- | ety, but good counsel comes | from quarters where the advo- ! cacy of artificial aids might be I expeeted. Mr. T. Currie, the ' chairman of directors of the | New Zealand Farmers' Distrii buting Company, located in the j Manawata district, considers that "the chief lesson to be 1 learned from the present depression is that the war-time level of prices, wages, profits and interest is a thing of the past, and that a- new levei is in course of j being established." Even the j average farmer admits this, j though he naturally grasps at , any straws of hope that are ofI fered him by those who exploit j miraculous theories of how to : win back to prosperity. The fact is that the day of the moratori ium in business is over and the | reclconing has to be paid. Recov- ! ery can only be gradual, being j dependent on the improved pur- ! chasing power of our customers. 1 Farmers who speak of prices be- • ing below the cost of production I must realise that the only rej medy is to bring costs down ; they must also realise that in I farming, as in e very thing else, the good has to be taken with , the bad, and those who are suffering most to-day from reducecl ! incomes were doing best when ; wool was lialf-a-crown a pound. They must come down to the | level of prices, liot maintain val- | ues in the expectation of ani other boom. It is fair to assume j that prices will be stabilised at I a more profitable range when the world's troubles have been j settled and normal trade condi1 tions are restored, but that may ! not be yet, and in the meantime, | the balancing of accounts demands a readjustment of costs i to revenue. War debts and reIparations appear to be the immediate point of concentration, and it is probable • that in a month or two a settlement of some sort will be effected, the agreement embracing debts, armaments and trade. The three are intimately' related and Europe will be cornpelled to see the question from the viewpoint of America, which asks why Britain is so concerned to escape payment of interest amounting to about ,£35,000,000— at the original exchange — when she is spending yearly considerably over £100,000,000 "defence" preparations. The discussions have been illogical 011 both sides, but eaeh realises that it has been found out, and an understanding becomes nearer. When that is arrangecl the financial barometer will rise and industry will assume a more healthy tono. Automatically confidence will be restored and unemployment will decrease. That means the beginning of better things for the farmer on account of more money being available for the purchase of his produce. It will thua be seen that all the discussions appertaining to debts and armaments have a direct bearing on the producers' position in this country, and that prices will re•cover gradually as the advantages of the relief given to manufacturers, and industry in general, are experienced. The. advisability of non-interference with the- economic processes has been clearly indicated in reeent months, and if events are permitted to follow their natural course there will be less suffering. The application' of counterirritants is a policy that cannot be recommended, and in making ali measuremexyts we must use the yardstick of the particul.ar period. For that reason Mr. Cur-

rie's advice is sound. When prices fall, wages, profits and interest should fall in sympathy. But development should not be checkecl any more than are the laws of supply and demand subjectecl to interference. We are suffering in New Zealand from too much economy. It is conceivable that the wage reduction to which everyone has submitted, together with a shrinkage in re- 1 venue which does not immediately affect the worker, has served to establish a new level, especially for those whose credit passecl with the good times. But, the present and the future of a food-producing country depends upon a maximum of output, and to increase output it is essential that development operations should be carried on at a rate regulatecl only by the value of the work to the Dominion. That is where we have made the mistake; all enterprise cannot be regarded as superfluous because times are hard, rather should healthy expansion be approved when the national income suffers through the collapse of prices.