BOOMS AND SLUMPS.

Auckland Star, Volume LXVIII, Issue 183, 4 August 1937, Page 6

BOOMS AND SLUMPS.

Your correspondent Harry Woodroff has drawn attention to the fact that when people get higher wages for the same work the price of all other goods and commodities rises; the cost of building a house goes up, and rent goes up. but we are not back to where we weTe before the rise. After the rise debts can •be paid with less effort. Interest can be paid with less effort. All borrowers benefit at the expense of lenders—that is assuming that it is £ s d that 5s borrowed. And we know that there is about £200.000,000 lent on mortgage in Xew Zealand. I do not know the amount of private loans and bank overdrafts, but all borrowers who have bought some real wealth with the loan are in a better position and should be able to sell again at a profit if they sold now. In fact they can show that ■they possess more assets. Borrowers are usually more active business people than lenders, and employment is stimulated. Six years ago, when prices fell, the effect was opposite. The borrowers' debt was increased. Hie assets vanished, and he had not a feather to fly with. Money was frozen, people bought only what they hao , to. ench as food, firewood and clothing, and very little of the latter. And there was considerable unemployment as * result. A wages, tax was put on to help unemployed, and now that things are better it is still with us. and there are too many unemployed. ' HARRY STEVEXSOX.