CONJURING WEALTH

Evening Post, Volume CXX, Issue 125, 22 November 1935, Page 18

CONJURING WEALTH

-.GUARANTEED PRICES

DANGERS OF INFLATION

Labour's scheme of guaranteed prices d and the effect it would have on the st national and individual economy was critically examined by Mr W Apple- , e ton, Independent candidate for Otaki in his speech at Khandallah last night! ■ The candidate emphasised the dangers •c that would follow the uncontrolled use ; of public credit. Captain M. S. Galloi_ way presided over an attendance of 85. Mr. Appleton received an attentive hearing throughout. • n Were it not for the fact, said Mr :r Appleton, that Unthinking people rele garded these plans as offering an escape from all our difficulties tho whole thing could.be dismissed as be>s ing just silly. The only source from d which funds could come to give any le guaranteed level of prices or wages was the national wealth and income and any guaranteed price-level would ie in practice be higher than thatprevaile ing, otherwise the policy would be unnecessary. It was impossible to 3 create wealth out of nothing, and there was no possible method ■of making the national income as a whole larger f it really was. To ask the people h of New Zealand to guarantee theme selves a higher real income than they , t were at present in the aggregate receiving, was 'to ask them to conjure wealth c- out of the void. All that inflation could ir do would be to raise money prices and - s the effect would be to do this unevenly )t leaving the total wealth not increased in^ amount but differently distributed. 2- "There has been no specific informa-1 s, ion," remarked the candidate, "as to , r what prices are to be guaranteed rg wholesale or retail, import or export. 'It has been vaguely stated that the d Reserve Bank is to be used for the s purpose. We are not informed; howg ever, as to what will happen when the ; incidental inflation raises the farmer's n money costs of production and inflates t the value of his land; nor are we told , if the farmer is to have the free dis- , posal of his bonus. p COST TO COMMUNITY. ® "If the proposals of the Labour Party % were put into effect," said Mr. Apple-. ,j ton, "it is evident that the cost of pro- ' duction of primary produce would have to be ascertained as a preliminf ary, and there seems to be some con ■j fusion amongst the ranks of the Labour. ~ people themselves as to how this is to '■ be accomplished. Interest on the value |of the land would.have to be regarded 'as a cost of production, and the point * arises as to what level of value would | be placed upon the Land, because, by manipulating land values, any. desired cost of production could be shown. Whatever is done, the community as a whole will be directly. or indirectly • taxed through inflation or otherwise to provide the bonus. Farmers themselves would have to find a considerable portion, while city interests, labour and * otherwise, would get no compensating bonus at all. Professional and business people, industrial workers, and r others, would have their wages diluted to pay the extra price, irrespective of = whether the people on the land needed the bonus or not. a "It,would be possible to guarantee 0 certain prices, although experience has r shown that it is not expedient to do so. If the value of a commodity represents r only a small area of the national economy the position can be heJped, but _ that can only be done," remarked the t speaker, "by a tax on the rest of the . community. We must remember that „' in New Zealand farm production is j; well over 60 per cent, of our total prof duction, and that about 95 per cent, of _ our exports are farm products. In a actual fact the Labour Party's scheme would not differ very much in essence , from the bounty effect through the present exchange to which Labour has always "been opposed, though now, for electioneering purposes they come for- •. ward with a scheme that is substantial--2 ly the same in principle, and would ■ f be more costly in its effects. 3 "Stabilised prices are fundamentally „ unsound," stated Mr Appleton, "and 1 would be so even in a Socialist State, t because if technical improvemnt is .. making progress, then the prices of the r corresponding goods should fall, otherr wise undue profit would be made. Any--5 thing like a rigid price structure would i simply stifle economic . improvement ; and retard or prevent industrial inno--3 vation." 1 EXAMPLE FROM GERMANY. ; The candidate exhibited a ten-million 1 mark note to the audience, and pointed x out what had happened in Germany .as a result of the inflation policy adopl- , ed there. He stated that when the coi--2 lapse quickened in April, 19255, prices ; of every commodity rose with startling ! steepness. Although the general pub--3 lie was urged by the Press not to make I more than the most necessary pur- ; chases, there was a rush of buyers for . all classes of goods. Prices in the > shops literally rose while you waited, and working-class anxiety deepened as the mark continued its descent. Although wages rose they did so in no--1 thing like the same proportion as the cost of goods. Bricklayers struck for 12,000 marks an hour, equivalent in normai times to* £600. Metal-workers were offered 9000 marks an hour and refused. By July, the lowest omnibus fare in Berlin was 1500 marks, and a ' little piece of veal, enough to make a . stew for two people, cost 50,000 marks. . The wage of a railway guide rose to . nearly four million marks a month, while the salary of a Cabinet Minister went up from twenty-three million ; marks to thirty-two million marks in a r matter of ten days. "Imagine," continued Mr. Appleton, ' "having to pay for one's dinner with 1 half a dozen packets of paper each as ; large as a Bible. Needless to say, the , transport of money became a most \ serious problem. The printing presses ' were working night and day In the . shops the prices were typewritten and . posted up every hour. A gramophone .at 10 o'clock in the morning cost five million marks, but at 3 o'clock in the ; afternoon it rose to twelve million marks, and a copy of the 'Daily Mail' ' was 35,000" marks one day and 60,000 marks the next. The position became \so acute that by August 14 a Communist Control Committee marched out of 1 town and forced the farmers and large ; landowners to give up their cattle, which were slaughtered on the spot. In other places the crowds swarmed out into the fields and dug up the potatoes. "To show how serious the position was for those with even a smaF amount of capital." said Mr. Appleton "a man in .Berlin who had made a loan with an original value of-about £50, foun'j himself repaid in full with the equiva lent of 7ld. Widows whose husbands had carried life insurance policies for their protection, found themselves quite as badly ofl as other investor*, for the policies were worthless We must remember that a breakdown of money touches life at a thousand points as well as the prices of goods in the shops. That is the sort of thing which would happen under inflation in this country. Those with money in the savings bank, those with life insurance policies or small investments or anyone owning stock in a company, would have their interests very seriously jeopardised, and the wage-earner is th-2 man who would be most, adversely affected of all." j a EXPERIENCE WANTED. j Mr. Applclon said that he had no de.sire to wreck the moderate forces in o the House, nor would he be a party t to placing Labour on the Treasury a

benches. The consensus of opinion seemed to be that people desired the retiirn of a number' of experienced business men unshackled by party ties, men who were determined to oppose socialistic legislation/and who would fearlessly uphold the rights and privileges of the people. The farmers themselves had freely expressed this view. The candidate said he.was not seeking to enter Parliament with any motive.of personal gain, but was actuated by an earnest and sincere wish to render service to his country, and: as proof of this he was ; paying the entire cost of his election campaign. "The day has passed," claimed the candidate, "when the electors are prepared to accept a party label as a candidate's chief qualification. The elector know* from bitter experience that too often the party hack is merely .chosen be« cause he is dumbly amenable to party discipline;- The advent of a group of Independents into the, political life ot this Dominion will ensure the restoration of Parliament to its rightful place in the esteem of the people." Aftei answering a number of questions, the candidate was accorded a vote of thanks and confidence, on the motion of Mr. O. Kember, seconded by Mr. S. Wright. [Extended Report—Published bjr Arrangement.] •■ '