COST OF LIVING

Evening Post, Volume LXXXVII, Issue 121, 23 May 1914, Page 6

COST OF LIVING

THE GOLD THEORY. TO TUE EDITOR. Sir,-— So far as Customs tariff causing rise in the cost of living is concerned, 1^ will refer to England, which is a { Free Trade country. During the last twenty yearb tho cost of living has gone up considerably. As a matter of fa<-t, the Board of Trade Gazette, issued by the Government, showed in its 1911 January issue that the cost of living in England (compared with 1891, a period of twenty years) had ■risen 20 per cent. Professor Ashley (I think), of Cambridge, issued a pamphlet which was printed by > the London Evening News, and he estimated the increase at about 17i per cent. Surely that is conclusive enough to show that it is not the tariff that causes the rise. In my opinion, the true cause of the rise in the cost of living is caused by tho value of gold falling. I haven't got J the statistics to hand, but I think you ! will find that the value of gold has fallen considerably of late years. Now, what caused this fall? Why, the fact that gold is produced much easier than formerly, which means that if it takes half the time to produce a given amount of gold as it formerly did gold would only be half its previous value (not price), and as all other commodities are exchanged with gold, it is easy to see that, if supply and demand of other commodities remain as before and that gold has fallen in value, you must give more gold than before for those commodities. That, in my opinion, is the true cause of the cost of living. — I am, etc., WORKMAN. [Pressure of space has required a shortening of "Worker's" letter. The fact that " cost of living " has risen under Freetrade in Britain does not refute the arguments of those who coil' tend that New Zealand's present tariff is burdensome to the public. Millions of Britain's workers are entitled to an improvement of wages and general conditions, but it _is contended, with statistics, by serious reviewers that the average British workman has better re cognition now than he had in the past. "Workman" will find big pages of the gold theory in the report of the Royal Commission which enquired during 1912 into the cost of living. Economists are sharply divided about the importance of tho old gold theory, but all admit, of course, that the fluctuations of the medium of exchange have to be carefully considered, especially in regard to effects while the prices of labour and of pro» ducts are adjusting themselves to the altered purchasing power of gold. "Workman" apparently forgot that when gold is " cheaper " labour becomes dearer in sympathy with the rise in prices, but there may be hardship during a period of change to the new equation. A notable example of the comparatively low purchasing power of gold is in parts of South .Jrica. The wages sound very large ? but the " real wages " (food, clothing, shelter, and so on) are nowhere appreciably higher than they are in New Zealand.] - ' "Peter Blank" declares that the oftquoted laws of supply and demand aTe not allowed to fix the prices of goods in New Zealand. He again refers to the Merchants' Association and "other combines and rings," and invites amy sceptical persons to peruse, the report of the Cost of Living Commiission. "The Civil Service Caah Purchase Association has mado arrangements with certain business people in Wellington as to discounts which are to be allowed customers," the correspondent continues. "Advice ha* been received that the formation of similar associations in other parte of Now Zealand has been greatly affected by the opposition of the Merchants' Association, which ha 6 brought pressure to bear on tho retailers. It is needless to comment on the methods adopted by tho Merchants' Association, but thexvord 'pressure' has a significant meaning, which no doubt certain retailers will find to their COfct."