LONDON BUTTER PRICES.

Auckland Star, Volume LVII, Issue 251, 22 October 1926, Page 4

LONDON BUTTER PRICES.

WHAT CAUSED THE SLUMP?

« NOT THE CONTROL BOARS."

SAYS MR. GOODFELLOW. "The knowledge that each season's produce must go into consumption before the next comes along should prevent any company by its marketing methods holding up. supplies for fixing prices." This is the view expressed by Mr. W. Goodfellow, and the managing director of the New Zealand Co-operative Dairy Company continued:— Many companies throughout New Zealand at the present moment are very seriously disturbed at the recent slump in the market. These companies put fancy limits on their produce, and during the past three years this policy bad given excellent results. The companies apparently were not aware of the danger they have run each year. More by good fortune than good management, however, they have evaded a similar catastrophe in each June or July. On several occasions during the past few years London merchants have frequently predicted just such a slump, and on each occasion 140/ has been the figure indicated—at last it has come! Now these same merchants say, "Control did it." They and we know perfectly well control did not do itl The factories which kept the butter off the market for many months caused the slump when they withdrew their limits, and a similar slump would have occurred in the past if the same factories had suddenly removed their limits. The New Zealand Co-operative Dairy Company's policy has always been not only to feed the market, but also to keep on selling all the year round, always keeping well in mind the fact that the produce had to be sold before the new season's goods were available. The present chaotic state of the market is the strongest possible argument in favour of national control, and is due largely. to the following causes in order of importance: (1) The economic position of Great Britain due to the coal strike. (2) Heavy summer production in Europe. (3) The release of large stocks in London held at fixed limits by factories. (4) Passive resistance by speculative merchants objecting to control.

You will note that I put control last. If we had had similar strike conditions last year, or the year before, the market would have in < all-probability gone down to a very low figure. The old stacks must be cleared, and the right thing for the factories to do is to cut their losses and get out. The forward position is sound, and once the market is cleared, I quite expect to see the price back to 170/, where it "would be. to-day under normal conditions'.

The Case for Control.

There is no cause for- undue pessimism, concluded Mr. Goodfellow, and let mc repeat that control has very little to do with the low prices now quoted for last season's butter. Control only operates from September, and the first shipment of controlled .butter has not yet reached London. If the producers really want to improve upon .what admittedly has been for the past ;foui\ years a very bad, marketing system, let them give the board a chance. The system agreed upon has been well tried, and those who are prepared tx> judge impartially know that it will not only work well, but will once and for all time place the marketing, of New Zealand .dairy produce on a highly efficient basis. This one seller principle is employed by nearly all successful big businesses the world over, and to, say that it won't work in the dairy industry is absolutely absurd.

THE TARIFF ISSUE.

EFFECTS OJf INDUSTRY. A TWO-EDGED SWORD. In his presidential address to members of the New Zealand Employers' Federation in Wellington to-day, Mr. T. Shailer Western said: "As regards the question of alterations in our Customs tariff, I adhere to tlo views expressed «t Chrietohurcb recent!;. They -were my own personal opinions. In speaking as I did I was anxious that investors in secondary industries should not adapt an expedient which, in my opinion : 3 certain to increase the cost of Jiving, and, ii'cre parti;i:U..y, will not in the long run be of any lasting benefit to tln» industries themselves. Both in the United Spates and in Australia increases in 'a: : a have up - ;i!l now- always been followed at regular intervale by demands for more*. The reason for this is the higher cost of production, due to the increase in money wages, , which always followH on higher protective duties. Since speaking at Christchurch, I find that the Governor of the Reserve Bank of South Africa has given a similar' note of warning to the South African public, and the last few days the cables tell us that manufacturers of five different lines in South Africa have been staggered by the increases in money wages just granted to their employees. These increases followed upon tariff increases upon articles" manufactured by them. This is a good practical illustration of one of the main arguments as to the futility of higher protective duties, even to the industries they .are designed to help.