HIGH PRICES OR LOW

Evening Post, Volume CXXIV, Issue 108, 3 November 1937, Page 10

HIGH PRICES OR LOW

STANDARD OF LIVING

PRODUCTION THE KEY

BURDEN ON CAPITAL

(Special to the "Evening P_ist,")

TIMARU, Thib Day.

The unwisdom of prices an. 1 wages above the standard of production was emphasised by Mr. M. G. C. McCajil, president of the Associated Cham'oers of Commerce, in his address to tile annual conference which opened here this afternoon. \ ■

The desire to. raise the standard of living of those below a reasons! Die level was to be commended, he sif id, but more harm than good was likd Jy to result if this Was accomplished tty : reducing the standard of living of oj;.her sections of the community. More^ wee, desirable as it might be to rjiiße the standard of living, it must not, be done at the expense of security.7 If a standard of living beyond the standard of production was adopted it woijld mean living as a. nation partly upoji capital until a general collapse ensue! 1

An increasing standard of ' comfort and culture had been made possible by the accumulation of wealth.- , and it would not be for the good of our social life if present accumuty itions of wealth were dissipated and fiiture accumulation made impossible:,. Money in the possession of the leaders of industry provided a livelihood : for those who produced more wealth in., the enrichment of the nation. Monqy absorbed by taxation flowed mainly into unproductive channels, anc> tb c nation was the poorer thereby. The accumulation of capitjd by the natural leaders of industry should be encouraged in order that mor<; and still more people might benefit fr^m their capacity for organisation anet. management, said Mr. McCaul. It fms a mistake to suppose that a wealtjtyjr captain of industry led a life of 'irase and luxury. Usually he worked, more intensely and for longer hour? than any of his employees whose livelihood he provided. It was often assorted that prosperity came by spending^ This was at best a half-truth, and at -wjorst a dangerous fallacy. Wise spen. ling upon productive enterprises and lupon welldirected industry would b< ring prosperity. It could come no otjher wayy STANDARD OF LIVINGS AND RISING PRICESJ, "The opinion appears to:y be gaining ground that the standard ctf living can be raised by raising prices,; hence tha cult of the 'guaranteed pric* 2' and the ever-advancing wages of ',' town and country workers." said Mr. McCaul. "No people can permanent ly enjoy a standard of living higher t]} an the real value of their production to • their fellow-man. Loan money on- expansion of currency may hide tliel facts for a while, but they will worltj out eventually. I think better remits \yould follow from the inauguration of a consistent policy aiming at Vc\e reduction of the cost of living, .thug permitting of a given wage purchasii ig' a higher standard of living. The jriore goods that the spending, money qf the public will buy the better for everybody, and this can best be achieved vby lowering costs of production and consequent selling prices." SPENDING AND RB TURN. A common apology for l(iigh taxation was the theory that some virtue attached to spending without regard to who performs the spending, why the money was spent, or the) return received for the money spent, said Mr. McCaul. "The accumulat ed savings of the people are a most dejstirable fbrm of capital, because it is ;new capital available for the promotiqifi of further employment and increased, production. Action by government thai; checks the growth of savings and th^is robs industry of the means to exjpand, sets a limit to progress. Action. by government that reduces the avafj able capital of the nation, whether bjr : excessive taxation or by extravagant J expenditure of borrowed money, ultimately adversely affects prosperity and Reduces the standard of living of the plebple below the level otherwise attainable. If we wish permanently to raise jtfae standard of living of the bulk of the people, it cannot be done by the dissipation of wealth, but must be attemi sted by the conservation of wealth and. by economy in its use." ' ECONOMIC USE OF CAPITAL. Modem production was lachieved by the combination of capital iand labour. If capital absorbed a greater share of the product of industry til an was desirable it was because it vA as not used with sufficient economy. Tjew Zealand had recently introduced.: a 40-hour week for workers, without; taking practical steps to ensure that*, the loss of production by labour shal? be compensated for by increased production on the part of capital. The "juayiue of the product of industry was aHI that there was to divide. If man wislied to work shorter hours, well and gjwd, providing he ordained that macjvTnes should work longer hours to mak(; up for it. "In the six-day week thjere are 144 hours. Man decides to WQl'k 40 hours, The factory is idle for 104 hours. For 40 hours' work the man requires sufficient to support him fo| .• 144 hours, plus Sunday. The capital represented by factory buildings an<l machinery also works only 40 hours and is paid for 144 hours plus Sunday. Why not introduce a three-shift syste m in all industries requiring a large, investment of capital for buildings and plant, then three times as many inert i will draw wages as compared with <.'very pound of capitalthan heretofore^ ,1 am convinced that only by the { adoption of some such system can labour receive a larger share of the prodtict of industry than now obtains. ' . "Consider the capital vaj'ue of oversea ships, the capital vallie of the berths they occupy, and the expensive equipment they use when in port. If the chief ports of New Zeal and worked a 24-hour day, the saving !,'made in interest charges would per mi it of shorter hours and higher wages ti>r the workers, and still leave an exftra profit to be divided between the snips and the harbour authority. Prosp; erity and a high standard of living, 1(o be secure, must be firmly based ufl on economy and efficiency in the use 4>f both capital and labour." Our increase in real comfort has not kept up j*yith our increases in production bejaiuse of the time we waste, the effort j»we waste in pursuing worthless thinj^j,' the goods we waste, and the money ?|ve waste."

STANDARD OF LIVINU AND