The Daily News. MONDAY, MARCH 22, 1920. HIGH PRICES.

Taranaki Daily News, 22 March 1920, Page 6

The Daily News. MONDAY, MARCH 22, 1920. HIGH PRICES.

The recent discussion in the House of Commons on the subject of high prices affords further proof of the need for effective action being taken in the direction of affording relief to the people of all countries. What should be the nature of those steps has yet to be determined, but the solution, of the trouble will certainly tax to the utmost the skill of the foremost statesmen and economists of the day. Although Mr. McCurdy (Parliamentary Secretary to the Ministry of Food) initiated the debate, he does not appear to have evolved any remedy except that of dealing with profiteering. At the same time he made some pertinent remarks that afford material for reflection. After emphasising the greatness of the destruction of material wealth during the war, he proceeded to refer to the falling off in the output of industries since the struggle ended, particularly mentioning the case of America, which had suffered less through the war than other great industrial countries. By inference, he attributed the lessened output to the exceptional number of industrial disputes which were more numerous than in any year since 1913, while the total of those thus rendered idle was a record for the last thirty years. This, no doubt was ,a factor in raising prices, though the preponderating cause was, and is, the shortage of supplies. In this connection, it should be noted, Mr. McCurdy asserted, that hitherto there had been no adequate effort on the part of the peoples of the world to make good the material losses during the war or provide necessities for the future. Any impartial investigator who attempted to ascertain the real cause for this falling off in industrial output, would naturally direct his attention to the all-important questions as to the effect of the demand largely exceeding supplies, and whether any special'benefit is derived by any one or more sections of the community, and, if so, which? As to the effeet, that is apparent to everyone—the shortage of supplies automatically raises prices, and the greater the gap between the demand, the higher prices soar. Who benefits? To an appreciable extent, the producer; to some extent the worker, though his share is illusory because while he obtains more wages, he has to pay more for all his requirements. The only other person who, by controlling the output, can practically place what price he pleases on manufactured goods is the manufacturer. The action of a certain firm of cotton millers is a ease in point. Scarcity breeds high prices, therefore, it would seem the manufacturers have a direct incentive to keep the market bare and reap high profits. This is a phase of human nature that is always in evidence when opportunity offers. When the demand exceeds the supply, the manufacturers are not concerned either with the cost of the raw material or its conversion into tli e finished article. They are rushed with orders and can charge what they please. The wholesalers take their corresponding toll, and so do the retailers —and the public pays. May it not, therefore, be claimed that insufficiency of output is a cause that needs prompt removal, if any means can be devised whereby an effective remedy can be provided ? So long as the shortage exists there is no prospect of normal prices being resumed, and it is difficult to see how production can be speeded up when it pays the manufacturer better to turn out lesi. than sufficient to at ieast equalise supply and Remand. Pro.Meering appears to have taken a

firm hold, and its tentacles are hard to move. The only lever that can be used is drastic taxation of profits made beyond what are fair and reasonable, and it is in this direction that the first step should be taken, starting with the producers of the raw materials and finishing with the retailers. "Profiteering," declared Mr. McCurdy, "is a check on production, a cause of industrial unrest, and a menace to social and political stability in every country in Europe.'' Surely it is high time that action was taken to shelter the consumer the inevitable burden of high prices. It may be argued that the more the manufacturers..are taxed on their profits the higher will prices soar, but this can be obviated by arranging the incidence of taxation in such a way that it will pay manufacturers better to increase their output and turnover by means of lower prices than by making abnormal profits. If this is done, there will be'W-lifficulty in dealing with the mer< H" "nB and retailers. Production is '• lie main essential, and both as regards foodstuffs and all other requirements efforts should be stimulated to meet requirements. Much has been made of the policy of a selfcontained Empire, but it goes without saying that unless an effective remedy is found for the present high prices there will arise an insistent demand for foreign goods, and this should be averted by every possible means. Prices will never revert to the pre-war standard, but there is a huge gap between the cost of the necessaries of life now and those of 1914, and that gap requires bridging as soon as possible, or the consequences will be very serious.