PRICES AND COSTS

Waikato Times, Volume 119, Issue 19890, 20 May 1936, Page 6

PRICES AND COSTS

The Government has virtually placed on secondary industries the responsibility of proving that increased prices are justifiable. It has summarily changed wage rates, hours of employment and working conditions, which must affect costs, but is seeking to prevent the natural result of this policy by delaying, at least, any increase in prices. Just how far the Government will go in thig matter remains to be seen, but those engaged in industry have a plain assurance, given by the Minister of Industries and Commerce, when he addressed the Wellington Chamber of Commerce some time ago. Mr Sullivan stated: “ The Government has no intention of striking out in a wild price-fixing policy,” and he added that industrial progress must come from within the industries themselves. “All the Government can and should do,” he added, “is to assist in all ways possible and to give you the necessary machinery measures.”

A great deal will depend upon the scope of any inquiry prior to the adjustment of prices and consideration should include the position of shareholders. The timber industry felt the full force of the depression. Building operations practically ceased, and with them the demand for timber. In many cases it was not a matter of reduced turnover but of almost complete stoppage of operations. Those who had provided the capital for the enterprises received little, if any, return, and with an improvement in business activity the average dividends of the timber companies listed on the Stock Exchange do not reach 5 per cent. The companies should be enabled to return the owners a reasonable yield on the money invested. Larger .profits may come from increased turnover, but with added costs a revision of prices will also be necessary.

The Government will probably recognise that it cannot adopt a policy which will raise costs and at the same time prevent prices from moving upward, and any attempt to do so would only tend to hamper the industrial development upon which the Cabinet is said to place such importance. The problems are far-reaching. If manufacturers can produce evidence of increased costs making an advance in prices essential then the next step will undoubtedly be a demand for higher tariffs in order to protect them against imported goods. Mr Savage evidently expects some action to be taken along those lines, but the ultimate result will be to increase the difficulties of primary producers, widening the gap between costs and returns. The Government clearly knows what it wishes to do, but the primary industries must be the first consideration, and the effects of its other plans on that group must be the decisive factor.