ON THEIR TRIAL

Evening Post, Volume CXIII, Issue 48, 26 February 1927, Page 10

ON THEIR TRIAL

PKODUCEE BOARDS GOVERNMENT-IN-BUSINESS \ RESULTS NEED KEENEST ' l ' ' SCRUTINY The first d.ay that tho railways N reverted to the control of private enterprise we all received- a shock at tho improved service we got, and the changed attitude of the officials. x This personal experience of Mr. Cheeseborough, one of the Franconia party' of American visitors, will be differently, received. Some wiii accept it, as an, accurate observation of fact; some will regard it^as a personal impression; some may call it the elassprojudice of capitalism. But, however it is viewed, tho fact remains that the United States population as a whole swung back to private entei prise either with candid rejoicing or with tacit consent. BUSINESS STROVE FOR FREEDOM. While some measures of regulative • control by Government or by Governmental authority have remained in the United States, the following statement froni "Principles of the New Economics-" (Lionel D. Edic) may bo quoted with,confidence:— "Since .the world war, the people of the United States have undergone a marker reaction away from th» ex-, tremo forms of Government control of economic affairs. The reaction is well defined in a catch phrase which has won wide currency—less Government hi business and more business in Government." So wide is the currency of this "catch phrase" that several years after' its birth in the United States it wqn a general election in New Zealand. Life service to this ideal has yielded brilliant political'results. The fruits of its practical application in the business affairs of his country still remain to be gathored. Edie continues: "The war emergency % brought the basic economic activities of the States under close Government' supervision. The; Federal Government, assumed control, of the econoniic.jyfe, of „the nation through a vast administrative machinery. . . Pricefixing, household thrift, priorities, and other means of enforcing war policies brought the'great r bulk of the economic "life of the country under the War Administration. The extreme extent of, ! __ this war control placed the business of tho country in a position where its freedom of initiative and its independent judgment were drastically curbed. Although the business interests were as a rule patriotic and willing to submit to superior direction while submission was necessary to win the war, nevertheless :.7tke .surrender of their freedom to conduct their private businesses was not a pleasant experience, and the minute the war was over business men ■ were straining'at the leash for eseapo from the rigid restraints of war days. The President reflected the-predomin-ating sentiment of the country when, shortly after the Armistice was signed, he declared in a message to Congress: 'While the. war lasted .*. .wo put every material energy of ,the country in 'har.ness. to,, draw,_;the common load and 'make of us one team in the accomplishment of.a great task. But the moment we knew .the Armistice to have been .signed .wo took thenh.arness.offi.'" , GLAD TO GET! BACK. "The war brought tbe most comprehensive organisation of economic life that Americans had ever witnessed, and the restraint and subordination which it involved were repugnant to the American spirit of free initiative and independence of action. The American people knew, in no, doubtful mood, ■ that'they did not desire so far-reaihing and inclusive regulation of their economic life. On the.whole, the American people .were relieved.-,at the prospect of being able to scrap the war organisation and to return to a generous degree of individualism in their business pursuits." As New Zealand, long before the war, had advanced much farther along the lines of peace-time State-trading than the United States, a swing-back to private enterprise, in full conformity with that of the Americans, was perhaps not to b-) expected. Nevertheless, a comparison with American methods provides, much food for thought. Mr. Oheeseborough records the <•■ ■ itnproveme"nt in railway service.when the railways reverted. State owned-railways have been the rule in. New Zealand so long, and State ownership'is so deeply implanted, that a parallel opportunity to iioTe the difference between private and State control is not likely to'be provided -here; but it is -within the knowledge of all that the new road-compe-tition of the automobiles has caused "a changed attitude" in Government railways and municipal tramways. Both services aro doing their work much better than they did; this information is based on the best'of evidence—their own. The New Zealand Eailways Department introduces with pride a new commercialism, and the municipal tramways run buses, etc. What would both services have drifted into if modern road competition had not arisen in an'entirely altered and aggressive form?

LITTLE LIGHT* ON STATE BUSINESS. J, One'of the dangers of Government-in-business is that where tho Government has a monopoly—and the railways used to be in a special sense a monopoly —-it conducts its affairs in such a manner that there is little or no check on them, no means of measuring them and finding out how well or ill the work is being done. If competition is sometimes wasteful, it also provides an acid test that State monopoly misses. As i soon as road motors partially broke down the monopoly, light was lot in, and changes began to take place. Lately Government interference has Taken "■ a new form, by placing restrictions n\ the motor competition with railways and tramways. This is a purely tentative step—though it appears to' have sonic degree of American precedent—, and its results should be keenly watch-' ed and carefully measured. Er-stric-tions on competition, if they aro allowed to merge into a pblicy of restoring the sheltered conditions"'under which railways and tramways used to slumber, will need vigilant observation. Transport thus shows two forms of Government interference—State ownership and restrictiv2 regulations— that must still be treated as on trial. Granted that there is at present a more favourable public opinion for Governmental intervention in New Zealand than in the United States, all sections of opinion will. probably concede that common interests require a more searching checking-up of results than ; was usual-in tho pre-war days of risii:g prosperity. MIDDLEMEN'S SERVICE. Yet another class of Governmental interference takes the form, not of Governmental control, but of the legalising by Statute of controls set up by industries themselves. In New Zealand the primary industries have thus set

up, with" tho Government's legislative assistance, several producer boards, equipped with , oxtremo compulsory power o^er individuals. In this movemeat the Meat Board represents tho right wing; the centre is tho Dairy Board (a very advanced centre!); and the left wing may turn out to be the Fruit Export Board. Hero again it is worth .while to quote Edie on American experience:—

"A phase of the elimination of middlemen has been-the policy of direct selling by the producer to tho consumer. In limited forms, co-operative agencies of distribution have sprung up to eliminate the middleman, and on a surprisingly largo scale tho mail order business has worked in the same direction. In some lines of commodities the effort has been to drive out the wholesaler, and to enable the manufacturer or producer to deal directly with the retailer. In other commodities, the effort has been to drive out the retailer as well. This'wholo tendency to attack, tho middleman has arisen partly from tho impression among consumers that many middlemen' are gougers and profiteers, and partly from the desiro of producers to meet the needs of the market. for reduced costs of distribution. Those who have been engaged in the elimination of the middlemen have, ho*wever, very commonly made the discovery that the functions which the old middleman performed | were indispensable % functions, and that 1 once the old middleman is eliminated, new marketing machinery has to be created to perform those fune- , tions. | The result is that whereas there has been a movement in many lines to drive. | out the middleman, the substitutes newly created to perform the same functions have themselves been so expensive that'marketing, oir the whole, has not become less expensive." These concluding words should be well weighed. The New Zealand Dairy Board results should be analysed careful Jy to 'see whether tho last quoted sentence covers them. Board supporters as well as -board opponents should be only too ready to dissect suclj ventures so as to tcst~their economic value.