THAT 5 PER CENT.

Evening Post, Volume CXVIII, Issue 51, 29 August 1934, Page 8

THAT 5 PER CENT.

(To the Editor.)

Sir, —The restoration of 5 per cunt, of tho cut to civil servants is.capable of moaning" a big thing to the country if it is, allowed to flow naturally, through the whole of the nation's economic channels, but the question is —will.it be allowed a free, unfettered flow!1 Herein lies a point that is of utmost importance. It is a practice amongst some distributors, when they see a little more spending, to raise prices, and so prevent that extra spending from reaching the producers, and so, consumption may not 'increase, but, if this evil is not checked at once, the proposed blessing may prove eventually to be, a curso; : Seeing that the supply of most articles of overy-day use is considerably greater than the. demand, there is no warranty for a rise in wholesale prices; but there should be an increased consumption to tlie full of the 5 per cent. This means a very considerable ineroase in turnover, much greater than appears on the surface, in which all traders will participate. If they are content to bo satisfied with the . increased turnover, without asking for increased profits, then the nation must benefit to a greater extent than what appears on the surface. On the other hand, if prices are raised, then this restoration will prove a. "boomerang, 55 and the second state; will bo worse than the first. ;. ■;..'; . .' ■.: .■.

Supposing that'priees all round were raised 5 per cent., as the fractions invariably work against the consumer, we might find that the actual rise was nearer 8 per cent.; in which case consumption would actually bo lessened, producers would sell less instead of more, the public would have to practise greater economy, and tue Government would, in the end, have to increase taxation; and unemployment would increase instead of decrease.

Seeing that the Government has provided what should be a great blessing to a large section.. of the community, it is up to it to take' such precautionary measures, as will ensure that the Tise should benefit the whole commuuitvi—l am, etc., • . - W. MADDISON.