Production Costs.

Press, Volume LXVI, Issue 20028, 9 September 1930, Page 10

Production Costs.

The subject of the address delivered last night by the retiring president of the Canterbury Chamber of Commerce, Mr Norton Francis, was chosen for him by the facts of the situation in which the Dominion stands to-day and has done not a little to place itself. All political and economic questions are subsidiary to this: What can New Zealand do to make the export industries pay? All other questions, in fact, provoke that one, and can be answered only with reference to its answer; and there is no doubt at all of what that is. The costs of production must be brought down. At the same time the standards of the product must ®e maintained or raised, and production be stimulated to the economic maximum. Nobody seriously disputes this, except on grounds that invalidate the objection; but although the wisdom and necessity of a course of action may be undisputed, this is not the same tiling as its being adopted. It does not even mean that the unwise and dangerous opposite course is not still being pursued. Sooner or later, of course, the .adoption of the right policy becomes compulsory, and the compulsion is harsh and hard as iron, as we see in Australia; but it is simple sanity to choose the right policy, while choice is still real, and so to lessen its hardships and reap its advantages sooner and more abundantly. New Zealand's position is quite clearly de-

fined; it can move to secure itself, or it can dawdle and wait for a stroke of luck, becoming less and less capable of moving while it waits; and because all sound arguments are arguments for moving, and because we need not only to admit their force but to act on them at once, Mr Norton Francis's address is well aimed. The Government, local bodies, the private employer, and the worker must be impressed with the logic of the facts, and must make their effort together. Such a conference as Mr Francis suggests might be useful; but there is no need to wait for it. Power to take the first and most necessary and longest steps rests Avith the Government and with local bodies, and it can be used at once. Certainly, the Government would have to begin undoing its own deeds and unsaying its own words; but there is a great deal more political advantage, as well as national advantage, in correcting mistakes than in leaving them for successors to correctThe Government has made few and slight economies, but it can do as the Federal Government has done in Australia; it can go back over its work and make more and bigger ones. It is spending money extravagantly on relief works; but it can take its cue from the Federal Government again, and rule out this particularly dangerous sort of waste. It can act at once in half-a-dozen advantageous ways, and it can announce a programme of reforms which might not be immediately possible, but which it would immensely encourage producers to hear of. The State must lead a national movement to bring down costs, because it has done so much to build them up and keep them up, and because its legislative artifices and its own mismanagement as an employer are now tho chief obstacles to the> country's economic refitting. Company Law. The information published in The Press yesterday concerning the evils of indiscriminate share hawking constitutes a strong argument in support of the Bill introduced by Mr W. E. Barnard, the member for Napier. It is intended to make the practice illegal; but the Bill, if passed, should be tho forerunner of a general statutory reform of the New Zealand company law. The necessity for such a reform is well known. Nearly twelve months ago, at a meeting of the Associated Chambers of Commerce at Auckland, when the urgent need of modernising the Companies Act to afford a greater measure of protection to the public was stressed in a remit brought forward by Mr A. F. "Wright on behalf of the Canterbury Chamber, it was demonstrated that a number of companies had been floated in New Zealand, under existing legislation, which the law should.never have allowed. The necessity for such reform has by no means diminished in the meantime. The new Companies Act, which came into force in Britain last November, contained a number of important changes in company practico, one of the most important being the alteration in the form in which balancesheets must be drawn up. It is now necessary to distinguish between the amounts respectively of fixed assets and floating assets, and in addition every balance-sheet must state how the values of the fixed assets have been arrived at. Other provisions lay a much greater responsibility on directors, and severely limit opportunities, formerly enjoyed by directors, of personal profit at the expense of shareholders. It was also recognised by Parliament that applicants for shares should be protected against a company's going to allotment when the amount subscribed is insufficient to provide the capital necessary for the business; but this provision was robbed of most of its value by the introduction of the underwriting device, and the underwriting of contracts by persons or companies totally unable to meet the obligation. It was urged by the president of the British Society of Incorporated Accountants and Auditors a few months ago that the Companies Act should be "further amended to provide that, before publication of a prospectus, there should be deposited with the company's bankers a sum of not less than twenty-five per cent, of that part of the issue which had been underwritten. It was also suggested by the Nation in May last that the Stock Exchange Committee, in granting a company "leave to deal," should require the publication of quarterly accounts, in accordance with the practice of all tht leading corporations in the United States, in place of annual accounts; for "anything might happen in the space " of twelve months," while the unfortunate shareholders would know nothing until the announcement of losses at the annual meeting. The reform of company law in New Zealand should not be delayed much longer. In the meantime, inexperienced investors cannot be too strongly advised to consult their banker, or an accountant, or a reputable sharebroker, before placing their money in share investments.