CONTROL OF PRICES

Press, Volume LXXI, Issue 21510, 27 June 1935, Page 9

CONTROL OF PRICES

TO I'KE MJtTOR OF THIS I'l'.Srls Sir,—-Recently by your favour I stated a theoretical case for the eontrolling of prices as a means to curing instead of enduring our economic malady. I' would now. with your further permission, meet the objections commonly urged against that policy, notice some well-known working exhibitions of this method, and suggest applications to our own need;;. First, it is asserted that competition will be eliminated —to all but the idealist a most undesirable result. But competition is not to be suppressed; it is to be restrained within the bounds of justice. Control does not hinder a game, it makes it possible: and. after all. the competition we know is not clean and straight-out, "the race to the swift, and the battle to the strong." That condition, softened as it largely is in our economic and social life by Christian charity, would be tolerable. Ii is the effect of "time and chance" that is disastrous, that the economic machine is thrown out of balance and runs with an irregularity ami jarring \ibration that portend a breakdown. In such a case "laissez foirc et laissez aller" is hardly appropriate: it is necessary to discover the fault and remedy it. ' . . A quite valid objection is that it is unfair to lix one price and not another. This consideration gives some apparent justification for the northern opposition to the wheat duties, though it must not be forgotten that the dairy and sheep industries have received" similar assistance from the high exchange rate. Of a similar nature was the injustice inherent in the conciliation and arbitration system, in that it granted wage awards without considering the means of those who paid—generally the primary producer—and without giving him any power to lix the price of his produce. Price adjustments must, therefore include ail those goods and services' that it may be deemed necessary to deal with—primary products, wages, prolits of distributors', rent 'a payment for the use of land> and interest 'a payment for the use of rnonc.y). It is not suggested that any price should be fixed rigidly, but generally between a minimum and maximum limit, allowing competition free piay within these bounds, and that the authority should be a judicial body, an economic court, a reconstituted arbitration court. It is obviously improper that a milk board should decide the price of milk or the Dairy Export Board the local price of butter, or the Labour party, if and when it attains power, the prices it will "guarantee the farmers for their products.' Finally, there is the question of prac-? ticabiiity. Mr W. A. Strachan is surely in error in his "absolute impossibility' ( because the method has been demonstrated with conspicuous success in the instances I have quoted and in such instances as our own wheat marketing scheme and the marketing of_ butter by the Australian Federal Dairy Produce Control Board. Our Australian neighbours are so satisfied that they have decided to take similar measures to raise the price of wheat to their growers. Moreover, all the adjustments made by our Government on the recommendation of the committee of economists are arbitrary fixations by authority—the reductions of wages and interest rates and the raising of the internal prices ot primary products through the exchange rate. In most countries of the world statesmen have thought, it necessary to enact certain measures designed to lesloie trade. There are many professions of belief that the existing competitive svstem is watertight, and tmsmkuble, but, practice belies this belief. It evident Roosevelt, the most enterprising and courageous experimenter, lu.it tried to raise the price-level of pnmarv products and manufactured »ood" by increasing wage:;. He might not have done so if he had been acnuainted with the experience of New Zealand. Then he tried currency nidation. an equally futile policy. Io raise agricultural prices he relied upon reducing supply, and Mr Elliot m Great Britain has followed much the same course. This is an indirect, uncertain. and negative method. For the purpose is needed a certain scarcity: a drought or a war is useful. But the price desired can be had directly by decree. The market may then be allowed to absorb what if can. There may be a surplus and there may not: it cati be dealt with when it appears, but surely it is poor policy to undersupply the etc., J.M.W. June 25, 1935,