RISE IN WOOL PRICES

Ashburton Guardian, Volume 71, Issue 36, 22 November 1950, Page 3

RISE IN WOOL PRICES

ECONOMIST’S VIEW OF CONSEQUENCES ADDRESS BY PROFESSOR SIMKIN (P.A.) WHANGAREI, Nov. 21. “The astonishingly good luck which unexpectedly has come the way of woolgrowers can do two important things affecting the whole community,” said Professor C. G. F. Simkin, who holds the chair of economics at Auckland University College, when he spoke to more than 100 farmers at Moerewa. “First, it makes the immediate abolition of all import controls a practical possibility and, second, it poses a very real ranger of inflation within New Zealand if farmers attempt to spend the whole of their, wool cheques. “Improvement in New Zealand’s overseas funds would make it possible now to terminate the costly, inefficient system of import controls under which the farmer probably suffered more than anyone else,” Professor Simkin said. “Australia has been able to lift import controls with a margin of six months’ funds in London, and six months would also be a safe margin for New Zealand. Our overseas funds this year should benefit by £100,000,000 from wool alone.

“If you woolgrowers try to spend your cheques all together in the next 12 months there is really a serious danger of inflation. Even if import controls are lifted, production cannot possibly increase to the same extent as wool prices.” Professor Simkin said that farmers should themselves set aside at least part of the new funds, treating them as a windfall, not as income. In preference to Australian anti-inflation schemes, Professor Simkin advocated a plan advanced by a Wairarapa farmer, Mr M. Daniels. This would allow individual farmers to invest up to half the 1950 wool cheques in securities, preferably overseas, with the right to deduct such sums from income tax assessments until the securities were sold. “The weakness of the scheme, said Professor Simkin, lay in it being left to individuals. It might be safer to have the whole industry acting through the Wool Board. Asked what he considered a safe period over which farmers' might spread the expenditure of the current cheques, Professor Simkin said he would rather not reply, but suggested four or five years. • Agreeing that the scheme might be practicable in more highly-developed districts, Mr A. Riddell asked whether Northland farmers might not be better advised to put the extra income back into the improving of properties. Professor Simkin: Do you think you could possibly spend it all without increasing the cost of your improvements ?