SAVING AND PRICE LEVELS.

Wairarapa Times-Age, 27 September 1940, Page 4

SAVING AND PRICE LEVELS.

QNE beneficial purpose that a compulsory war loan may be expected to serve is that, of setting limits to inflation. Already the available supply of goods and services—the things that money will buy—has fallen away considerably in New Zealand. The volume of imports has fallen, partly as a result of positive restriction and partly on account of the war disturbance of industry and trade in Britain and other countries overseas. At the same time secondary production in the Dominion appears to have dwindled. Tn his address at the annual meeting of the New Zealand Employers’ Federation, the retiring president, Ur AV. Machin, commented on a recent claim by the Minister of Finance (Mr Nash) that in the nine months from September, 1939, to June, 1940, “the goods produced in our factories were greater than in any previous nine months of our history.” Against this Mr Machin pointed out that the. Minister had since given the Government Statistician’s estimate of factory production for the year ending June, 1940. The estimated value of this production is £30.5m, exactly the same figure as for the preceding year. As Mr Machin observed, if this estimate turns out to be correct, it must follow that the volume of production has fallen, because prices have risen. The position to be faced in any case is one in which the circulation of money is a high level, in itself and relatively to the available supply of goods. The clangers thus opened of a continuing rise in working and living costs will be modified by war saving. While they are important from this standpoint as well as that of their immediate purpose, the Government’s compulsory loan provisions relate only to a section of the community—individuals paying over £5O and companies paying over £7O in income tax. Compulsion on a broader scale may be impracticable and undesirable, but voluntary saving, in the extent to which it is legitimately possible, by people on any income level, is well worth encouraging and facilitating. In Britain, Australia and elsewhere, large sums have been and are beingraised under voluntary savings schemes, by the sale of stamps and certificates, and war saving on these lines undoubtedly ought to be instituted in New Zealand.