Bay of Plenty Times. FRIDAY, APRIL 22nd., 1938. BOOMS AND SLUMPS.

Bay of Plenty Times, Volume LXVI, Issue 12332, 22 April 1938, Page 2

Bay of Plenty Times. FRIDAY, APRIL 22nd., 1938. BOOMS AND SLUMPS.

in the course of his speech at the Easter Labour Conference, the Prime Minister, the lion. M. J. Savage, said inter alia: “It is our task to build the new prosperity upon more stable foundations than the old. It is our aim to eliminate the succession of booms and slumps to which our economy has continually been subject in the past, and to produce and maintain conditions which will give the people a steadily rising level of security, plenty, and happiness.”

But are not booms and slumps beyond the control of individuals, companies. Governments or Parliaments' Booms and slumps follow natural laws, and they are rhymthic, and there is a rise and fall like the tides. The tides follow natural laws and the tides cannot be controlled by man or any body of men. If it were possible to eliminate booms and slumps from the economic system of the world—and ours is no different from the brand of economics of other countries —the method of elimination would have been discovered by the ancient Egyptians, Babylonians, Assyrians, and that inventive nation the Chinese. Booms and slumps cannot be eliminated and to suggest it is in the nature of loose talk.

Booms and slumps originate in the markets and depend entirely upon the old and unchanging economic law of supply and demand. Let us illustrate this by the experience of a single commodity, with which most of us are familiar—wool. In the three wool years of 191)2-33, 1933-34, and 1934-35, wool prices were exceptionally low, and the total wool cheque was exceedingly low. There was then a slump in wool. In the season of. 1935-3(5, prices improved, and the wool-cheque for that year Avas appreciably larger. In the season of 193(5-37, there was a boom in wool, prices literally soared and the total wool cheque for the calendar year 1937 was over £19,000,000. In the current season which terminates this week with the sale at Wellington, prices are much lower than they were a year ago; some wool brokers estimate that the season’s wool cheque will be about £10,000,000 loss than in the previous season. Let us point out that in the periods referred to above wool sales were held at the same centres all through, the sales were attended by representatives of all consuming countries, or as the technical term has it, there was a “full bench” of buyers at each and every sale throughout the seasons. What we desire to point out here is that there has been no change or variation in the mode, style or method of selling, and yet over the period we have had three slump seasons, an improving season, a boom season, and again a season -with a marked recession in prices. How, we ask, are the movements from slump to boom, and from boom to slump, to be checked, or eliminated? Is there any power on earth that can prevent such movements which in effect reflect human nature. Parliament cannot check such natural and inevitable movements. Parliaments of the world have failed to stabilise national security or natonal happiness.