Evening Post. THURSDAY, FEBRUARY 25, 1937. INDUSTRY'S OWN TASK

Evening Post, Volume CXXIII, Issue 47, 25 February 1937, Page 8

Evening Post. THURSDAY, FEBRUARY 25, 1937. INDUSTRY'S OWN TASK

"I promise you that I shall not have acquired sufficient information in my very limited time to write a book on your country and all that it portends." With these words, Lord McGowan let it be known yesterday that he did not propose to enter upon a discussion of New Zealand's affairs —political or , industrial. We appreciate both the courtesy and disinclination to offer a hurried opinion which dictate1 this attitude. At the same time we regret that an Empire industrialist of such great experience and capacity cannot be induced to comment upon the industrial experiments which we are making. There is in this Dominion

at present an abundance of theory, and it would be better if we could mix with it a little more practical experience. Otherwise we may pay dearly for our experiments. Something may be learned, however, by applying to our own problems the general principles which Lord McGowan enunciated. The first and most important of these is that the progress of industry can be assured only by its own efficiency. Lord McGowan certainly approved Britain's alteration of her fiscal policy; but the merit he discerned in the alteration was that it inspired confidence. It started the wheels of industry; but when the start had been given the machine had to run on its own power. In order that, industry may keep moving that power must be developed by industry itself. Now is the time for development. Lord McGowan gave a warning that the future may not be so favourable. Therefore, it is essential (he, said) that industrial corporations should take, advantage of the present prosperity to ensure that they , put their house in order, that they should, out of today's surplus earnings, equip themselves with the most up-to-date plant procurable, so'that they shall have the lowest operating cost possible against the day when they see a recession of trade and they will continue to be competitive with the rest of the world. Part of this preparation, in Lord McGowan's view, should be ' the greater use of research, as a means to the improvement of the materials, the processes, and the products of industry. Another part, and (his is a joint responsibility of employers and workers, is a positive contribution to the maintenance of industrial peace, meaning not merely the absence of industrial disputes but "that state of aiiairs in -which by reason of confidence between all engaged in industry, everybody puts forth his best, whatever his job." The application of these principles to New Zealand industry today demands the co-operation of the Government, the industrialists, and the workers. -The Government has taken wide powers to itself to bring about what is termed the rationalisation of industry. In the exercise of such powers there is a great and immediate danger that the powers of Government may be regarded as sufficient, not merely to start the wheels of industry, but to keep the machine running. When the Government proposals were before Parliament we stressed this danger. The Minister of Industries and Commerce now evidently perceives it himself and begins to understand that it may be both unhealthy for industry and cmbarrassing L to the Government. In an-

nouncing the appointment of the ' Wheat... Committee yesterday the i Minister spoke with refreshing 1 candour on this aspect of the < question. / ' .When an attempt is made to ration- j alise an . industry which is only just holding its own so far as profits are ( concerned, Mr. Sullivan said, the first ] demand of those engaged in that in- i dustry is almost always for an increase ] in the selling'price. We can all make profits if a benevolent power steps in ! and fixes prices at a figure to cover all 1 costs and leave a margin of profit with- i out any regard to efficiency, hut this ] would not be rationalisation .in the public interest. In the wheat industry £ in ■ particular the Government has s adopted a policy having regard to the } fact that there are about 20,000 engaged s in the production of wheat and over 1,500,000 people to consume it. The Minister's statement applies fully c to the wheat industry which has been i given fixed prices and market mono- i poly. It applies also to other indus- t tries that have no better claim by 1: reason of their relative importance, i but are hoping for similar wholesale J "rationalisation." When an indication I is given that a pliable Government f will institute licensing schemes to re- t strict competition, embargoes to bring i about market monopoly, and price- r fixing to save the trouble of selling 1 on merit, industry cannot be blamed 1: if it grasps the opportunity with both v hands. The winning of profits by the arduous and difficult processes of v

efficiency may be slackened for the time being. But how long can such "rationalisation" be practised? At best, we believe, no longer, ihan Uie artificial prosperity thus engendered takes to mount to the top of the switchback. Then, if industry has not prepared itself, there will be a swift and possibly calamitous descent. The Government which has proposed the method and made available the means for the protection that is wrongly named "rationalisation" has the prime responsibility for guarding against the abuse which may have disastrous results. But responsibility rests also upon the industrialists. If they take the easy road arid fail to build up the strength of the body of industry they will suffer on the day of reckoning. . On the workers also there is no small responsibility. They may consider the present as a happy harvest time and a time to exact from industry all that they can get by industrial and political pressure. They may press for more than industry can give;, but if they do so without thought of the ultimate consequences they will wreck their own means of livelihood. There is an impression abroad that all such warnings are mere bogies, that industry can stand the forty-hour week, new restrictions, and higher expenses, and nothing bad will happen; and if it does happen, the Government can be urged' to adopt some new credit or :control; policy that will put everything right. But everything has ultimately to be paid for, and if real credits are not established by efficiency, the accumulating debits will quickly become perilously heavy. No amount of Government control, however wise (and the present control is groping and experimental), can be a substitute for essential efficiency in the management and operation- of industry, itself.