THE CAUSES OF UNEMPLOYMENT

Press, Volume LXVII, Issue 20224, 30 April 1931, Page 11

THE CAUSES OF UNEMPLOYMENT

V- «WTOB op THE PBKSP Uachin ' B 'otter in Mont" **" ' s * re P°tition of theories en published time after * ®* Zealand consumes about 25 HjUfl er Gutter production, of cheese and 7,000,0001b .^S Canterbury supplies tbe pmfa* w l»eat which the country jfes Ipwer values of local* uisuiued eoniway impoverish our giyo an advantage

to one section of the people, to the disadvantage of the farmer. The export values in 1929 were worth about £56,000,000. In IPSO they fell to about £41,000,000, and it js assumed by some that New Zealand is therefore £15,000,000 poorer, as compared with 1929. But exports and imports are merely an exchange of goods. If the export price level falls consideration should be given to tho price level of imports. In other words, if we can purchase with £41,000,000 in 1930, a similar amount. that we could buy for £56,000,000 in 1929, we only require an all-round adjustment, together with increased production (which has been manifest since 1919), and real wages should not fall, but will allow for a real increase. The external debt is supposed to be a great burden on tlia country, but only that portion of the debt that has been used for wasteful purposes can- bo termed dead weight. Imported capital actually gives help ~o industry, as it is generally borrowed at lower, rates than clients can obtain t'or loans from local private investors. By England's action id appreciating currency by reverting to the gold stand ard (as some economists assert), the price level should fall all round, and manufactured goods which we import should fall in sympathy with raw ma terials. But manufactured goods do not respond quickly to the lower price level, causing a painful period of transition, which we term depression. The exchange rate is sometimes thought to be one of our pressing problems, but an adverse exchange is an ecjual advan tage to the exporter, as it- is a disadvantage to the importer. If a. farmer sells £IOO worth of wool in London that amount is worth £llO in New Zealand currency, and an importer must pay £llO for those credits in order to pay for his £IOO worth of goods. It must be remembered that the external debt will always bo a burden to the extent of uneconomic spending, and the difference between the inflated values ruling at the time the capital was borrowed, and the present-day lower price level. I would like to sug gest that an effort should be made So stabilise the income of our country. If vve could determine what might be the approximate average price level for our products over a given number of years' we could use the amount that was above the average to compensate pro ducers when prices fell, thus preventing a fluctuating income which is apparently the main cause of our troubles. Certain dairy companies have put this principle into operation. When butter fat rises over a certain price the company holds the amount in reserve and

pays it out when the price falls. This gives the farmer a steady income. It would appear that Mr Machin and his co-delegates on the Chamber of Commerce are inclined to overstate our troubles. The adjustment period is progressing rapidly. There is a better international spirit in Euiippe, and the settling of the Indian troubles should pave the way for our figure prosperity.—Yours etc., S. SCHOFIELD. April 29th, 1931. -