Guaranteed Prices

Dominion, Volume 28, Issue 284, 28 August 1935, Page 11

Guaranteed Prices

. Sir, —“Equity'’ argues that, in principle, there is little difference between guaranteed prices and exchange, except in degree. This may be so, but on the figures given by Air. Langstone the difference in degree might be very great. We note that “Equity,” like the Laboux - Party, condemns fixed exchange and supports the uncertain guaranteed price, even though the principle may be the same. Your correspondent says there is no need to talk of “manufactured money.” It is the Labour members who are talking about this, so he had • better address them on the subject. The Reserve Bank transaction was not inflation, nor was it “the purchase of £23,000,000 .with a capital of £500,000,” The sterling balance in London belonged to tile Government who handed it to the Reserve Bank to make it available here. A banker may call this a “purchase” but the plain man would call it paying money into his account at a bank. No bank capital was used in the transaction. The amount to the Government’s credit in London liad already been used here through Treasury bills, thus the transaction of paying the London balance into its account in the Reserve Bank merely exiablexl the Government to cancel the debt incurred here against that balance. No one hail any more money to spend in consequence of the transaction, therefore it was not inflation. This, however, is irrelevant to the main question.—AVe are, etc.,. •

N.Z. WELFARE LEAGUE. Wellingtoxi, August 27.

Sir, —The Labour Party’s nxucix-trum-peted scheme of guaranteed prices is made much clearer through the recent utterances of Alessrs. Nash, Chapman and Semple. The first proposals of Labour did not set out what guaranteed prices meant. The average man thought it meant that Labour was going to assess what it cost the farmer to produce lewt. of butter, and then he was to be guaranteed that price. Strong criticism has been levelled against the proposal because it did not make clear where the additional money was to come from. It now appears, however, that no additional money is to be paid to the farmer. If the Labour Party had brought the proposal out shortly before the election, it might have caught the farmer napping, but sufficient time has elapsed for criticism and inquiry and the farmer- became insistent for the details of fixe scheme. Air. Walter Nash, in a rash moment, consented, or was asked, to address the dairy conference at Palmerston North, and apparently, not too happy about the impression he made, dealt wxth the subject later through the Press. Air. Nash in this statement said: “The difference between this scheme and that advocated by Air. Sinclair in 1930 is that the farmer gets a positive price based on cost for hts product instead of a speculative . price. If the proceeds of the sale over the years do not meet the price paid, then the account will be adjusted through the ordiuary procedure; but a balanced economy will inevitably give a payable price for commodities.”

Air. Chapman, member for Wellington North, in a speech'to his constituents last week, speaking for Labour’s policy of guaranteed prices, as reported la the Press, said that “one of the greatest han-dicSf-s of the farmer was uncertainty as to what prices he would get. By averaging prices over a period of seven years the farmer could know what he could expect, and the Government as purchaser of the produce would be iu a position to market to the best advantage.” Air. Semple, Wellington East, speaking at Lyall Bay on August 26, as reported in the Press, “produced a graph showing that the rise and fall in the prices of primary products in the world’s markets travelled in cycles. He pointed out that the price shifted up and down over a period of years, and that the good years cancelled out the bad years. The indications were that the guaranteed price given to the farmers was nothing more or less than a repayable advance, and that in the long run the nation may lose nothing.”

These three prominent members of the Labour Party in Parliament leave no 'doubt now as to what guaranteed prices really mean. They mean that the farmer is to be guaranteed the market price over a period of years. .That is the price that he has always received. The only difference. in the present system and Labour’* proposal is that the Labour Party proposes to estimate what, say, butter is going to be worth for the next seven years and pay the farmer what, in its opinion, is going to be an average price for that period. 'Air. Nash makes it quite clear that, if the proceeds of the sale over the years do not meet the price that the farmer has been paid, then reclamations will be made against tho individual farmers, and they will be sued if necessary for the balance. If the price sit which the Labour Party assess the goods was below the average market value, the farmer would have to stand out of his own money until the end of the period of adjustment. Mr. Chapman is also -most definite on ■the point, and adds further that the Government is going to be the sole purchaser and seller of the goods, and of course th’ - farmer will have to pay the whole cost of State administration, and would have no say whatever in the disposal of his produce.

Mr. Semple’s statement that a guaranteed price given to the farmers was nothing more nor less than a repayable advance and that in the long run the nation may Jose nothing leaves the Labour Party’s policy stripped in all its nakedness.

Guaranteed prices, therefore, are nothing more than a myth.—l am, etc., SEVENTY MILLIONS. M’ellington, August 27.