The Southland Times PUBLISHED EVERY MORNING. Luceo Non Uro. WEDNESDAY, MAY 26, 1920. THE DECLINE IN PRICES.

Southland Times, Issue 18831, 26 May 1920, Page 4

The Southland Times PUBLISHED EVERY MORNING. Luceo Non Uro. WEDNESDAY, MAY 26, 1920. THE DECLINE IN PRICES.

Although we are told that the sensational fall in prices that has taken place in Britain, the United States and Japan will not affect this country immediately, there can be no doubt that if the decline is permanent New Zealand will feel its effects. At the same time it will be well to remember that the results of this downward tendency should not be under-estimated. A few days ago we were given some idea of events following a drop in prices in Germany, coupled with the imposition of an export tax. A sudden fall in prices may have more serious results in the industrial market than the present high cost of living, leading to a curtailment of production and unemplopment. In Germany thousands were thrown out of work because at the reduced figure manufacturers could not carry on and the whole financial machine was thrown into disorder. A gradual decline, if we can control its progress, will give us time to adapt ourselves to a new' level of prices and order our way. of living to meet the new conditions, because if there is a depression in the prices of commodities we must be prepared to find that there is less money available for spending and for a review of tho scale of wages. Trading concerns that bought at high prices will be faced with serious losses if the market breaks suddenly and the effects will not be confined to them. In Britain and America the decision of the banks to restrict their advances to investments of genuine worth has put a sudden check on speculation and has reduced the amount of money in current use, but already in the Old Country' there are signs that production is being checked as well. The fact that in certain industries large stocks are being, held will come as a surprise to people w r ho have been led to believe that the principal trouble to-day is the shortage of supplies; but it must be remembered that Britain, like other countries in the world, is suffering from what amounts to a part breakdown in the means of distribution, and in that ivord is included the all important processes of finance. There may he large stocks of manufactured goods in hand, but it is difficult to get them upon the market on terms that will return the profit that the makers require and it is more difficult to find moans of transporting them to markets overseas where better prices can be obtained. This shipping difficulty is being overcome slowly and surely, but tbe present financial uncertainty has provided a temporary check to the export business in Britain and in America. The position will probably right itself quickly if it is handled sanely. It seems to be generally admitted that in the main the peak of the price rise has been reached and that a downward movement may be expected; but on the other hand there are some lines where there are actually prospects of a further advance. It looks as if foodstuffs especially will go higher before they come back. The wheat market will bear profitable examination. The American wheat output is expected to be lower than usual and Australia’s crop is not up to expectations while in Europe the demand for wheat will exceed the supply. The position at the present moment suggests that the world is fared with the prospect of a great wheat shortage and it would be idle to think that this country will escape from the effects of it, if it comes to pass. The Canadians arc looking forward to wheat being three dollars and a-half and even four dollars and if their expectations should be realised the farmer in this country' will not unreasonably seek to have the local price and its relation to the world’s market figure reviewed by the government. The Prime Minister has assured the country' that our wheat supplies will be adequate to our needs, basing his estimates, of course, on assist mice from Australia; but tho Australian government has already been asked to consider the question of taking over the Imperial Government’;' wheat to satisfy tho Commonwealth’s own needs and that, fact should not be overlooked if our calculation? include Australian-grown cereals still in that country. Without going to the length of prophecy, it seems reasonable to say that for the farmers who can handle it, wheat should be a good line for the coming reason. We have mentioned the wheat question because if the break in the market for other lines should come upon us too precipitant ly and bring depression, the dear loaf might well be a matter for serious concern. The position at the present moment is full of danger and governments the world over must be regarding the financial barometer with anxious eyes. Tho decline in prices recently reported may be temporary; but undoubtedly' this is a time when people should be guarded in their expenditure upon luxuries. Much has been said about the. disastrous effects of wasteful spending and if we look to the serious possibilities that the future holds we can see much to make us heed the warnings, but anything in the nature of precipitate action, anything savouring of panic may' have far worse results than we can at present anticipate. We require to be cautious and watchful, hut without, fear, as patient with the government as we may be, and ready to co-opcrate with the State’s executive officers in their efforts to meet the serious problems that undoubtedly face us at this moment.