LOWER MONEY WAGES

Dominion, Volume 24, Issue 64, 9 December 1930, Page 9

LOWER MONEY WAGES

World Prices Dropping INESCAPABLE RESULT Advice to Dominion VISITOR’S FRANK COMMENT With the downward movement of world prices, lower money wages were pointed to by Lord Barnby, in an address to the Wellington Chamber of Commerce yesterday, as an inescapable consequence for New Zealand. As he understood it, the situation would call for legislation by agreement, making possible simultaneous amendments in all existing awards of. the Arbitration Court. He gave it as his opinion that the railways should be made free from political influence, and that payments for relief work should be limited to a basis sufficiently below current rates for normal employment. Mr. D. J. McGowan, president of the Wellington Chamber of Commerce, who presided, said that Lord Barnby was a distinguished figure in finance and industry in England, and was principal of a large wool-buying Bradford firm, and a director of many businesses with worldwide ramifications. Lord Barnby, who was greeted with applause, said that it was a privilege to him to meet so piany business men. He appreciated very much the opportunity to address such a gathering. He took a great interest in New Zealand because . whatever helped New Zealand helped those in the Old Country. (Applause.) He trusted that the Dominion would avoid the pitfail to which they in the Old Country had succumbed of disregarding the close relationship between agriculture and commerce and industry, and that it would avoid the impression developing that one was profiting unreasonably and unjustly at the expense of the other.

Cvcle of Declining Prices. So great had been the hospitality he had received and so cordial the conversations in many directions, that he felt he would not be considered impertinent were he as a visiting industrialist fired with admiration of New Zealand’s future possibilities, to be frank in expressing current opinions. It was obvious that for the first time since the late ’eighties the world was experiencing a cycle of declining prices in terms of gold. Every community in the world was going to be subject to the inflation which must take place as a result of the fall in commodity prices. . Primary producing countries like New Zealand must find the income from the sale of their produce severely reduced. Their spending should be correspondingly at least as much or more reduced. That was unfortunate, he admitted, for countries from which they bought manufactured goods and, above all, Great Ent? ain; that was why they were vitally interested in seeing the situation corrected as quickly as possible. Deflation or prices of produce carried with it the need of deflation of services—that was, the unit cost of labour in all its forms. World factors governed prices of produce. New Zealand was trying by artificial means to neutralise or at least delay the reflection of local natural movement in the remuneration for services rendered Obviously, if a reduction of nominal wages, that was money currency rates, was not made, then all wage-earners were experiencing an actual real wage increase by the higher purchasing, power of what they were receiving. Limes ot adversity were not the moment for increased production costs by higher wage costs. The extent to which individual earnings need not be reduced, owing to substitution, where possible, of payment by results,” and so attaining lower wage unit costs, was entirely a local matter. But to attempt to hinder the natural play of economic forces was only to postpone the inevitable correction and delay the return of prosperity.

A Real Emergency. . As he understood it, the situation would call for legislation by agreement making possible simlutaneous amendments in all existing awards ot the court. That like other actions, necessarily required courage and submergence of party interests by local statesmen. But this was a real emergency, and it would appear that local patriotism should make this possible, and by general goodwill and a spirit of .equal sacrifice all round constructive action taken. It would follow— though almost a platitude to all thinking men—that with equal courage the railways should be reorganised as an ordinary commercial undertaking made free from political influence. Why try to evade the unescapable logic that it was no longer a monopoly—since road transportation, private and collective, was an irrepressible competition —which had come to stay.

Again, social service legislation and the extension of Bureaucracy. - however desirable in prosperity, must, in current adversity, be rigorously denied, even ruthlessly curtailed. The payments made for relict work should be limited to a basis sufficiently below current rates ior normal employment to put sucn relief work into the proper relation to the general wage rate, and remove risk of such relief payments disturbing existing employed.

“Action bv New Zealand along these and other obvious lines would alone appear likely to give confidence to loan holders and again, in due course, when correction has been effected make available to New Zealand the funds which she. like all new and developing countries, must have to ensure sound and prudent progress, said Lord Barnby. “Everywhere I bare been impressed with the scope for increased productiondairy products, meat, fruit, etc. Rational efficiency and intensive research are collaborating to accomplish this. But what is going to he done with the prodime when the markets do not maintain a nrice level, commensurate with the reGnm needed to maintain the standard of living New Zealand has set up. “Incidentally, New Zealand must in anv ease, courageously face a substantial deflation of land '’ alues ~ services, that is, wages, will also canj with it a deflation of value of buildups.

Need of Rationalisation. “In vour national life, if I may add reflections without trespassing on your hospitality, there appears need in many directions of rationalisation, commercial and industrial.” said Lord Barnby. A falling price lever compels readjustments. and the elimination of many units whose development, and perhaps existence, the prosperity of a rising price level alone make possible, and the shorter the delay in recognition and correction, the greater the contribution to general readjustment. Agreement by the central banks of issue to a better use ot existin'- gold reserves would, I admit, lighten the present pressure, but until an upturn in the curve of world prices occurs, the need for universal readjustment to lower levels remains imperative. “In urging the buying of all necessary imports from Great Britain, it may not be inopportune to remind those who may be inclined to say ‘What do you get from Great Britain in addition to the absorptive market for New Zealand produce.' I would add the protection of the Navy. and. what is insufficiently realised, the assistance of the Trade Semirit es Act. and the activities of the Lint Marketing Board.” to Mr. McGowan, in Lord Barnby, said ct d stimulating guest had delivered a no- rcpO rt of address. ' vas - s would be read it in “The nonunion wourn with great interest sir John HanAmong the GoTe rnor-General, I'i'” 1 ! A Paish, his Majesty’s Trad® Mr. Mr J T. Grose, general Cp 'T.X of Vhe National Bank: Mr Gorr!ojd general manager of the Union Assurance Company; m','" A Edwards and Mr. C. W. Budd, ~f the British (United Kingdom) Manufacturers’ Association.