ECONOMY NEEDS

Dominion, Volume 24, Issue 110, 3 February 1931, Page 10

ECONOMY NEEDS

Adjustment of Costs

AID FOR FARMERS

Sir H. Beauchamp’s Address

The need for drastic economy was stressed by Sir Harold Beauchamp yesterday in his address to shareholders at the annual meeting of the Equitable Building and Investment Company of Wellington, Ltd. The effect on New Zealand of the prevailing world economic crisis was, in the main, no different from that of other countries, said Sir Harold Beauchamp. We have our proportion of unemployed, a proposition that is tending to Increase, we have the dole, heavy taxation, and the strong resistance to any attempts at reduction of costs, because wages and production costs are so closely related. It must be obvious to everyone that we must adjust costs in relation to world markets, but the Socialist faction in our midst contends that it would be a blunder of the first magnitude to reduce wages, inasmuch as high wages lead to increased consumption, and that is what is wanted just now. But that plausible contention would pass were we in a position to afford high wages. Spending Power.

As a matter of fact, we cannot, as a community, in my opinion, continue to pay the current award wages, let alone any wage increase. The banking returns for the past quarter clearly show this, for the spending power of the people has contracted. I take the current account balances against which cheques can be drawn, and the note circulation—that is, paper currency in the pockets of the people, and which they can spend at any moment as they desire. These two items for each quarter of the past two years are as under:—

Comparing the figures of the first quarter with those for December, 1929, there is a contraction of £4,541,789 in the spending power of the people, and the tendency is for a further contraction, for our export products continue almost unprecedently low in price; and, while we all hope that they have touched bottom, no one can be definitely' certain of that. The trade returns are not satisfactory. . . A deficit in the nation’s finances seems inevitable, and increase in taxation seems more than probable. To meet these altered conditions party interests should be subordinated to the pressing needs of the State, and all classes of the community should strive by all means in ther power to assist whatever Government that may be in office to place the finances of the country upon an even keel. Economy—rigid economy—must be the order of the day, and no one must be afraid of hard work. If possible, additional taxation, which so seriously clogs the wheels of industry, must be avoided. It would appear that low prices, have come to stay for a time at least, and we must adjust internal costs accordingly. Helping the Man on the Land. Agriculture is and always must be the principal industry of the Dominion. Our future progress depends almost entirely upon the prosperity of our farmers, and it would be suicidal to sacrifice agriculture to industry. On the other hand, it is extremely important for agriculture that industry should be prosperous, for it is necessary for industry that agriculture at the same time should be flourishing,_ as the consequent increased purchasing power would reflect and stimulate industrial output, and would tend to keep - prices down. The farmers in New Zealand, like those in most other countries, are in extreme diflicuties. Indeed, it is not too much to say that the New Zealand farmer is in a parlous condition. He can be helped, and the most effective help that can be given is to reduce costs so that.he may, even at the present low prices for his produce, earn something for himself. “It will be noted that from the amount we transferred from the Reserve Fund at the end of December, 1927, viz., £20,000, we have had to draw no less than £12,000 to provide for ascertained losses on mortgage advances to farmers. The difference between the £12,000 and the amount written off has been found from the profits earned by the company in each of the years succeeding 1927. It is anticipated that it will not be necessary to draw further sums from the Reserve Fund to meet losses in respect of advances made to farmers, although these borrowers have to face such adverse conditions in carrying on. So far, they have to contend with low prices, high wages, and inordinately high taxation im-, posed upon them by the Government and local bodies. We know of many cases where income derived by fiirmers from the sale of wool, fat stock, and dairy produce is not sufficient tp meet the heavy burdens they have to face in the shape of such taxation. Most lending institutions in this Dominion —this company included —have made substantial reductions in mortgages due to them, and, in addition, have reduced rates of' interest from 6J per cent, to 5 per cent., with the object of assisting their debtors. In spite, however, of these concessions, many farmers have been quite unable to pay any interest whatever on the reduced amount of their indebtedness and are looking to the mortgagees, in many cases, to find money for rates and taxes.. “It seems to me that the time has now arrived when the Government and public bodies should -meet these unfortunate farmers by not taking steps to drive them from their farms by attempting to enforce payment—in other words, they should afford to them the same liberal assistance that is now being granted to them by mortgagees. That, surely is the true meaning of ‘equality of sacrifice’ about, which we hear so much nowadays. Failing that, it is only a question of time when the man on the land will have to yjeld to the financial and economic storm through which we, in common with the rest of the world, are passing to-day.”

1920. Deposits. Circulation. Total. - £ £ £ March .... 25,738,743 6,370,894 32,107,637 Juno 20,810,881 6,547,872 33,358,753 September . 23,908,295 6,272,353 30,240,648 December . 22,728,404 6,544,522 29,273,016 1930. March 23,905,822 6,417,038 30,322,860 June 23,225,804 6,433,265 29,650,129 September . 20,803,171 6,039,175 26,842,346 December . 18,597,839 6,133,388 24,731,227