A National Stock-Taking

Sun (Auckland), Volume IV, Issue 981, 26 May 1930, Page 13

A National Stock-Taking

OVERHEAD CO.STS MUST COME DOWN How to Restore Prosperity A VIEW BEYOND THE MISTS TWO months ago 31r. -James Fletcher, of the Fletcher Con- * struction Co., reviewed the industrial and economicsituation in a notable address which was delivered to the members of the Auckland Rotary Club. This speech attracted widespread attention throughout New Zealand for its breadth of view, its common sense and constructive suggestions for restoring prosperity and bringing about a revival in business. Today Mr. Fletcher addressed the Napier Rotary Club and in the course of another notable contribution to the subject amplified the proposals of his earlier speech and has given Parliament and the whole country a lead.

(Special Report to THE SUN.) NAPIER, Today. It is my pleasure to be able to speak to you on the subject of industry’, and I hope to be able to clear away for a few moments the mist that I feel is hiding our vision on important phases of this subject. We have lost meantime our sense of proportion, and now it is time that we took stock of our position. A little introspection is a good thing. We have valued the goods on our shelves at cost for long enough; we have been carrying on our books for years a tremendous collection of out-of-date ideas and methods, without making provision for the inevitable depreciation that must be faced. Let us hesitate no longer. Let us get down to realities and see exactly where we stand. Let us see just what our profits or our losses are, even if the contemplation of contracted profits or capital losses is going to hurt. Let us start by taking stock of the governmental bodies, both national and local.

How do the Government and local bodies stand? I refer to no particular party’. Can any member of our Legislative Assemblies say with sincerity that we are today not carrying a surplus of Statepaid employees? Can we, as taxpayers, view the yearly increase in civil servants, with its continuously expanding cost, without wondering where we are heading? Can our legislators say that they have had a serious stock-taking and have met all the depreciations, and made provision for all the antiquated methods that lumber up the administration of the body politic? Can we, as business men, view with complacency the ever increasing number of local bodies, with their increasing administrative charges? Could any business enterprise stand the relative proportion of overhead charges for its administration that our State and local bodies stand? And who are to blame for the continuance of such a state of affairs? DOFED WITH NARCOTICS You are. I am. We all are. We have stood serenely by and allowed the mist to dim our vision. The mirage of good times and of remunerative prices has been to us a narcotic that have stilled our anxieties, and has produced in us an unhealthy/ flabbiness. We have allowed the muscular development, born of effort and enterprise, t,o sag and wither. And now when the mist is lifting, and we see a possibility of having to face realities in the shape of lower prices and harder times we seek again further doses of that same narcotic in the hope that the mirage may still remain in us. We appeal to the Government, the State and the local bodies to bring back to us that life of ease and contentment. I have read all the available documents which the commission on the question of unemployment prepared. And reading those documents, I am astounded that ilit: cum mission had only* the suggestion < further narcotic doses, in the sli- . : of unemployment pay, to offer as liie cure for our unemployment problem. The commission’s findings were practically the provisions of Mr. Feter Fraser’s Unemployed Workers’ Bill presented at last session of Parliament. I think, if anything, from the point of view of the employer, that Mr. Fraser’s bill is preferable to the suggestions of the commission. That a. body of men of the calibre of the Unemployment Commission should fail in constructive ideas is beyond me.

In a young virile country like New Zealand I say we can promote something better than a mere admission that unemployment is a problem not to be cured, but to be endured and paid for. I say that, if the farmers and industrialists, employers and employees alike, of this country, calmly sit by and see the findings of this commission become la'w, then they certainly deserve all that is coming to them. And m the state of our political parties, at the present time, it will take all the efforts of the farmers and. industrialists to prevent the Labour Party in the House from forcing its will on the Government Party. And so for unemployment, as well as our other ills, the State and local bodies respond —not with drastic cures, but with the same sedative doses that our political system has now grown accustomed to. But the system this time. I sav, will not respond to the narcotic dose. The same old method will not bring the mirage before our eyes, or bring to us a return of progress of prosperity. CURE MUST BE DRASTIC We must seek a cure. If needs be. it must bo drastic, but something must be done. “Take stock” must be our motto and, if the stocktaking gives us to think furiously—and i say it will—then we must do what the business man does, reduce overhead. We have lately seen the financial statement. The country was- given a narcotic dose in the shape of a surplus of £150.000. That narcotic dose was achieved at the cost to the country of over a half a million sterling in additional overhead. The State, had profited by an expansion of Customs revenue, but its charges, too, had grown, and will continue to grow to the country’s detriment, unless that bugbear of all concerns, private and national. viz., overhead, is tackled drastically and courageously And 1 would reduce overhead not by endangering the position of any permanent official, but by stopping any further increase in the personnel of the State departments, and by bringing to those now employed increased business and better methods. Let us take stock of the State Advances Department. No one would dare to say that the Advances to Settlers and Workers Acts have not proved a wonderful success. But when one reads that, for 35 months ended March 31, 1930, the Government had advanced £9,540,000 does it not seem time to take stock Do not changed conditions of finance call for an investigation of the department? We have Savings Banks with funds seeking outlet in the shape of mortgages over house property. We have building societies today eagerly seeking for

sound investments. We have the private investors with hundreds of thousands invested in Australian securities. Why? Because the State has made the first mortgage on residential properties an unsound investment. I say that the policy of lending, as adopted by the State Advances Department last year, is responsible for the chaotic state of the residential property market in Auckland today. One thousand unoccupied houses are the toll of the loans made as a rule in excess of a reasonable margin of security. ADVANCES SYSTEM ABUSED I do not blame the present Government for the uneconomic system of 95 per cent, loans to workers. The late Government was responsible for that, but my object is not to hang anybody’s scalp on the fence. It is to get down to realities. * The conditions that called for workers’ loans no longer apply, so I say discontinue them until the 1,000 unoccupied homes in Auckland, and the unoccupied homes in all the other centres throughout the country are once again tenanted. Leave to the savings banks, the building societies and the private investors the provision for financing the man who may still want to build. I say they will do it on more economic lines than the State has done. Has not the mirage affected our State lending department until it thinks that what was well 10 or 15 years ago may still be well? Let us take stock of the manufacturers. Have they shown the enterprise that they might? I regret to say that in too many instances they have shown a lack of vision. The memory of old time struggles is still with them. They fear the step of facing the depreciation of their out-of-date plants: they lack too often the monies to buy new plants: they fail in their selling organisation. and too often the manufacturing side of their activities is made subservient to an importing and trading business. And the Farmer—has he recognised that conditions change, and that he must change with them. Doesr he recognise that the day of his isolation is past? He is really in the thick of things. His vocation calls for brains and. enterprise as well as brawn. Does he recognise that the potash produced from the destruction of noble forests, involved in the clearing of his lands, has year by year been slowly exhausting itself: that the wool and lambs from bis farm and station and the butter fat from his holding are drawing the phosphates and nitrogen from his soil: that he is living on his capita], unless he gives back to his land as much as he takes from it? The faded agricultural glories of Mesopotamia, Persia, Egypt and Greece have been instanced as due to soil impoverishment. The bulk of New Zealand’s output is directly dependent upon the grass that grows under our feet. HELPING THE FARMER To our Farmers I say “Take stock.” Away with the mirage of your past results. Consider whether some part of it was not a charge against capital. Consider whether you have returned to your land the phosphates and nitrogen you have drawn from it. Call to your aid new methods of cultivation. By the proper use of Fertilisers the farmer can increase the fertility of his land, improve his own condition of living, and give a power-, ful impetus to the increase in population. And to our Government I again say “Take stock.” This time take stock of its attitude toward the man on the land. Soil, it is- claimed, determines the history of nations. Farming reaches its greatest perfection—not in those countries most favoured by nature—but where government is best. I say to our Government “Assist the man on the land by soil surveys.” Problems like cattle sickness are not beyond remedy. Call in the scientist and survey the soils of our countryside. Instruct the farmer when, how and what fertilisers he should use.

Today some of our farmers complain that fertilisers do not give them the results they expect. This is not necessarily due to the fertiliser. M ore likely it is due to the use- of wrong fertilisers for tho particular conditions *hat obtain in a particular area. I. would protect the farmer against wasteful use of artificial manures, by giving him the best information as to the particular requirements of his land. I would develop the Department of Scientific and Industrial Besearch, which has already done much useful work but is today being hampered by lack of funds. No conditions of economy should deprive the farmer of the best advice. To our Government, our local bodies, our manufacturers, our farmers and traders, I say, “Take stock of the men seeking employment.” DEVELOP IDLE LANDS Have we sufficient belief that our country can produce enough to give decent sustenance to everyone of our citizens. I say if we reject the narcotic palliatives for our difficulties if we approach the matter with courage, we can provide employment. I say we can promote prosperity and contentment if only we give to industrial development one-half the thought that we give to concocting doses of narcotic makeshifts. And when 1 speak of industrial development I include our great farming industry along with the promotion of our secondary industries. I mention this particularly because I have been accused of advocating secondary industries, and forgetting the man on the land. I would increase industry by developing our idle lands. I would use the funds of our State lending institution for the promotion of small holdings around our urban areas. I would encourage our urban population to seek provision for themselves and their families on small areas suitable for intensive cultivation. I would encourage the squatter to break in areas of our back country * by exempting from land-tax. for a period of five years, the lands which he develops. Further, I would give to the landowner an exemption from in-come-tax on all income expended by him on land deevlopment. We give to the man who insures his future by life insurances an exemption. I consider that the man who develops land, to provide for his future, is just as much entitled to concessions a.s the man who by a policy of insurance provides for his future. I would repeal the super-land-fa* an i&r a.# it land*

being fairly worked. I hold that taxation should not be levied with the avowed object of forcing men (.large or small) off the land, f would legislate to put men on the land: not to drive them off. I would tackle the problem of transportation. The cost of transport is one of the biggest charges against out revenues. ~ And the problem of transport, the reduction in the overhead charges of our State and local-body administration, and the financial stability of our country can all be secured by the promotion of our secondary industries correlative with our primary industries. WE MUST INDUSTRIALISE New Zealand is not in some respects unlike America and Canada were 50 or 60 years ago. Sixty years ago ! A-tnerica had an adverse trade balj ance of £43,000.000. At that time practically 50 per cent, of its population was engaged in agricultural pursuits. In 1910 the proportion had dropped to 33 per cent., but its Adverse trade balance had turned to a favourable one of £632,000.000. Canada today is easily the most prosperous of our Dominions. Why? Because Canada has given heed to the development of its manufacturing industries as well as its agricultural industries. And where do our political parties stand on the question of industrial development? Eighteen months ago our G ment advanced as one of its policy measures the development of our manu- ■ fact tiring industries. Parliament appointed a committee to deal with the | question, but the Hon. Mr. Cobbe loft j the summoning of the committee and ! the performance of his party’s pledge | until a more convenient season. Was the Government’s pledge only a nar- ' cotic dose to soothe the nerves of clamouring manufacturers? T would classify our manufacturing industries. | Some things we cannot hope to manufacture on an economic basis. 1 Those things I would admit into our country with as little duty as the matter of our revenues would permit. The things that one can and ought to manufacture I would prohibit from entry into New Zealand. I would spend part of that huge sum of our State Advances in assisting industrv to manufacture the goods we could and should make here. FINANCING MANUFACTURERS When the worker was in need of cheap money, the State provided for his wants. The housing question today is solved. The needs now lie with the manufacturer and the farmer and I would give heed to their wants. Whatever funds the State can provide by way of State loans should be reserved for the industrialist and the farmer. If England, with its highly specialised industrial development, finds it necessary to establish a bank to finance new' and better methods in industry, surely our Government can recognise the same necessity. I would say to our dairy farmers, “Use New Zealand butter boxes.” I would say to the contractor and builder, “Use our native-grown timbers.” and. more than say it, I would enforce it by means of such tariff duties as would make the use of American timber practically prohibitive, and T would only give concession to Canadian timber on terms of reciprocity in regard to our butter exports to Canada. f-Juch a step would give immediate employment to 2,000 of our own timber workers. I w r ould encourage our orchardists to can our peaches, pears «ind apricots instead of importing American fruits. We have men seeking -work, yet our good New Zealand money goes out in thousands to purchase American canned fruits.

I would have our factories manufacturing woollen goods, boots and shoes ploughs and harrows, reapers and binders, motor-car bodies, roofing tiles, gas and electric stoves, and baths and basins. I would limit the use of bitumen for road work. We manufacture cement of the highest quality, that makes a concrete infinitely superior to any bitumen road. Yet, on the one hand, we send our money to countries where our trade balance is adverse and, on the other hand, we keep cement plants and workers in New Zealand on short time. I would prohibit the importation of any dressed marble or stone work. I would subsidise the production of motor spirit from our brown coals. COAL DISTILLATION The mines of the Waikato and Southland have millions of tons of coal available for distillation purposes. Slack coal today is being dumped and i burned for want of up-to-date plants, j We are still importing coal for railway j requirements which will be unnecessary when proper briquetting plants, employing New Zealand labour, have been installed. I would encourage foreign manufacturers to establish works in New Zealand, and would admit, duty free, the whole of the plant and equipment necessary for such undertakings. I would go further. I would admit, during a period of 12 months, while their works are in course of construction, the goods of any such manufacturer free of all Customs duties. I would achieve this industrial development by prohibitive tariff restrictions. I would encourage the local trade at the expense of America and Canada. I would not interfere with imports from England. In the early stages I would keep our factories working to capacity to fulfil orders now given to countries outside England. In the boot and shoe trade alone I would find employment for 2.000 men and women. With the assistance of factories preserving the fruits I mention. producing the woollen goods and agricultural impjements. and the hundred and one articles of everyday use, which we can and should manufacture here, I say this country could find employment for every Snan ready and willing to work. I would throw open our gates to immigration. REVISE IMMIGRATION Notwithstanding unemployment troubles, the best asset to a young country is the advent of a right class of immigrant. America and Canada secured millions of immigrants. who contributed much to their prosperity. | The immigrant is an asset, both from J his productive capacity as well as the j savings he brings into the country. Increase of population is the biggest need of our country and. to increase our population, we must adopt an ; aggressive policy of land development ! and industrial development. Our statistical returns have lately j taken stock of our increase of population. Only 18.000 is the total for the year. This is serious, and when our ! increase*, falls to a figure as low as ! that it is time to take stock. Every j man, woman and child that enters the country makes more work for those already here. And the more work they j have, the more'will be the opportunity j of providing work for more to come, j And you say “What will be the'effect' on our revenues of the reduction in our ; imports due to growth of local manu- i facture”? What will the farmer say j to suggestions of tariffs against some of his necessities? Their fears are only some of the same narcotic potion that has produced the dreadful mirage preventing us from seeing things as they are. Did America suffer from a policy of selfprotection? Has Canada failed to progress by following a policy of second- , ary development? No. Each of them has held thei~ markets and has become a serious competitor with the con-* sumers for the manufactured goods in the very markets which their customers previously controlled. Not that J advocate that this country should be- j come an exporter of manufactured j goods. I advocate only a policy of self- ■ reliance. AUSTRALIA SHOWS COURAGE Australia is in the grip of a crisis. Her Government is approaching the matter with courage, and perhaps it is well that Australia has today a : Labour Government enabling her to tackle problems that might well have j intrigued any party not supported by \ the masses. T do not think Australia is doing the right thing in the circumstances Her statesmen are overlook- I ins Uig rreav market for A.!irtraliaxj

exports. The prohibition* which Aus:ralxa has made against British manufactures should have been levied in a I greater degree against countries nopurchasing Australian produce. Th*» ! interests of her best customer seem to | have been overlooked. But Austral: » ' has a great destiny, and I feel that in i the years to come you will find An? ' trail a with a favourable trade balance j instead of its present chaotic financial position. And why? Because she is in the main following a policy of industrial development, aiming at mailing her a self-reliant country. ! The policy of industrial development 1 which I advocate for New Zealand will i not mean the cessation of business wit lour best customer. Bather, it ma\ mean increased business to her. It ' will, however, affect countries where today our trade balance is adverse — I countries that do not admit our pro- ! ducts on any but impossible term> ! butter enter the United States on fair and just terms? Can any good reason • be adduced why New Zealand should i not eat Hawke’s Bay peaches and I apricots rather than Californian" j Maybe our revenues would receive :i ! setback temporarily, but the economic j forces would soon right that. Bring more : population, and we may still require j the same total of imports, but per I capita, the ratio would be considerabb lower. The added revenue from internal trade would, in any case, soon make up any difference. And our farmer —let him take stock. Today ho ; is using an American plough, a Cana- ! dian reaper and binder. American ready roofing for his barn, Seattle tim her for fruit and butter boxes, and an American car. COST OF CHARITABLE AID But he is paying high for hospital j and charitable aid —keeping some of the unemployed from want. The electric-power board has levied a rate. W© find his outgoings are keeping pat i with his income. His hospital rate would be reduced by 30 per cent if we had no unemployment; his power board levy would not exist if blew Zealand industry was producing the plough he uses, the reaper and binder that cuts liis wheat; if New Zealand-made tiles were used on his barn, and if the body of his car was built with New Zealand labour and the local s&wmiller was cutting his butter box timber. I say the farmer can add to the profit side of his balance-sheet if he will give to the New Zealand industrialist the same amount of co-operation as be has brought into the marketing side ot; his own business. And what of our railways? Local industry would place this lame dog of our national services on the right side of the ledger. It would mean such an advent of traffic on the railways that, with little additional capital expenditure. outrailways would be contributing to revenue—not drawing from it. SUMMARY Freights that today are borne by shipping companies, more or foreign to our country, would remain in the country doing service to outfarmers and our manufacturers. Our taxation would have every chance of reduction as the movement grew With each reduction of losses on our services would come nearer the dav of reduced taxation. And the day of reduced taxation would bring nearer the release of further sums for the development of our lands and industrtes And as that development came, so would unemployment vanish. T 1 e cry would be for workers—not for jobs. And then the healthful stream of migration would grow, bringing ships to our ]>orts laden with new assets in the form of potential producers and actual wealth. That day would stabilise the farmers’ position. His best market is his local market. His wool and his lamb for local consumption gives him a price that includes what he has to pay for freight and charges on his export goods. His butter is sold on the local market at the same price as what it brings in London. Will not the farmer be. interested in lowv,r taxation. lower freights and better prices? The farm ers and the industrialists must make common cause. Their interests are one, and as the farm lands smile with productivity, so will the towns. And when the town smiles the farmer will laugh. The mirage born of the nar cotic potion w-ill have disappeared and the progress and stability we strive for will be achieved.