THE FARMER.

Auckland Star, Volume LVIII, Issue 195, 19 August 1927, Page 17

THE FARMER.

WHY HE IS POOR. HIGH WAGES WOT THE CAUSE. IXFLAXIOX AXD INTEREST.

Tae questions which Professor Belshaw, Professor of Economics at Auckland University, attempted to answer in his address to the Chamber of Commerce at its mid-day gathering were:—ls the real net income of the majority of rarmers greater or lese than in the years pnor to the war, and what factors have led to the present economic position of the fanner ? Tlie real net income of the farmers is obtained by subtracting farm cost* from gross money income and dividing the balance by ' the retail price index of the commodities which the farmer and hi. family consume." Taking the selling price of exports as a rair measure of charges on the farmer's prot:s income, Processor Be thaw showed by elaborate statistical tables that between 1911 and 1927 the retail of household goods rote in proportion to the selling prices of produce. Co farm costs other tables compiled by the Professor showed that as compared with pre-war conditions the dairy farmer benefited from the relation between export prices and wages during the period 1914-27. except for the last two years; and the Tanning community as a whole benefited in the same way except in the years 1922-2.5 and 1926. The purchasing power of money had been less than in 1914 during the period 1913-27. Thus thouzh the lailure of waizes to fall with prices in 1926-27 had been burdensome to farmers, '"it must not be overlooked that the wajre-earner most decidedly did not share proportionally the gains of the years of prosperity." A reduction of wages to the extent of less than ten per cent in 1926 would have practically restored the position a£ it was in 1914. Such a reduction would hive saved each rarmer less than £13 a year; and Professor Belshaw's conclusion was that "if other cost price relationships were the same as in 1914, the present burden of wages would scarcely be sufficient to account for the existing depression." A similar statistical investigation into cost of producers' material showed that except for a short period, the disparity between prices of producers' goods and farm commodities had not been an important element in depression. Seeking the Cause. Where then was the source of the present depression to be found? Professor Belshaw's answer—supported again by carefully compiled statistical evidence —was that the two causes of the difficulties against which the farmers were struggling were the post-war inflation of land values and the heavy interest charge on mortgages. "Since 1920." said the Professor in conclusion, "an increasing share of the products of the soil has been going to those who have lent money to the farmer. To bring the farming community back to its 1914 position thi3 charge would have to be reduced by approximately one-half. The disparity between retail prices *nd export prices has reacted prejudicially on farmers as a whole during almost the whole period since 1917. These two conditions are the primary cause of the present depression." Tha Wage Factor. As regards wages the Professor repeated that- he could not accept the wages-rate as a factor of primary importance in the problem. ""While a fall in wages in 1926 would have relieved the situation somewhat," said he, "the worker did not share appreciably in the benefits of boom vears. Any reduction in wages which the worker is likely to be prepared to accept will not materially affect the situation. An efficient system of credit will do much to relieve the position, but the only complete remedy is the slow liquidation of the over-valuation and overmertgazmg of land, painful and unacceptable as this may be."