8.-4.

This great fall in export income was not completely reflected in the internal price-level. The following table gives an interesting picture as between export and other prices:—

The general picture is one of steadily rising prices to 1914, a sharp and continued increase to 1921 a temporary drop in 1922, a fluctuating but high price-level till 1930, and then a catastrophic drop. Before taking the question of prices further, this is a suitable place to consider the effect of prices and other factors on land vlaues.

THE UPWARD MOVE IN LAND-VALUES TO 1930. Farm costs move behind market values. The high prices of the immediate post-war years consequently increased the farmers' net profits at a higher rate than the rate of increase of market prices. The great increase in the farmers' income was but one factor of the internal prosperity. As already pointed out, the rise in overseas prices meant that a smaller proportion of exports had to be set aside for interest payments abroad ; in addition, there was a great flow of funds made available by heavy Government borrowing in London. The result was a wave of almost unbroken prosperity, with the peak occurring in 1921. The high profits of the farmers were capitalized in land prices, which quickly reached absurd levels. Two other factors tended to increase these values. The first was the purchase by the Government of land for the settlement of returned soldiers. The second was the reduction in direct taxation. In 1920 land-tax receipts were £1,557,903 and income-tax £6,369,765, but in 1926 land-tax was down to £1,266,659 and income-tax to £3,368,516. During these years the farmers paid no income-tax, and not all the land-tax paid was in respect of farm lands. If, for the sake of example, we assume that £9,000,000 was a proper sum for direct taxation and that one-half of this sum was fairly payable by the farming community, the difference between that sum, £4,500,000, and the £1,000,000 (or less) paid by farmers in land-taxes is a fair indication of the value of this tax concession. The capitalized value of this sum at 5 per cent, is £70,000,000, and it is not unreasonable to suggest that this was reflected in increased land-values. The result of the wave of prosperity referred to was an extraordinary land boom. In 1918 and 1919 the position in connection with transfers of land was—

Transfers dropped between 1923 and 1924, but between 1925 and 1930 they continued at a high level. In the twelve immediate post-war years (1919 to 1930) 418,914 transfers of land were registered. The total area comprised in these transfers was 28,653,739 acres and the total consideration-money shown was £462,027,881.

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Year. Wholesale. Retail. Imports. Expenditure Exports. 1914 .. .. .. 1000 1000 1000 1000 1000 1919 .. .. .. 1103 1567 1941 1511 1671 1924 .. .. .. 1584 1604 1555 1586 1597 1928 .. .. .. 1417 1618 1360 1642 1520 1929 .. .. .. 1413 1607 1355 1636 1456 1930 .. .. .. 1376 1562 1345 1628 1144 1931 .. .. .. 1270 1447 1322 1490 874

Number of , Consideration Transfers. ' Money. Acres. £ 1918 .. .. .. 19,949 2,014,526 18,083,634 1919 .. .. .. 22,496 2,013,468 25,197,354 but for the years of the first " boom," 1920 and 1921, the figures were — Number of . Consideration Transfers. ' Money. Acres £ 1920 .. .. .. 45,128 3,882,683 62,446,574 1921 .. .. .. 55,746 4,573,482 81,790,063