EXPLOITING AN OLD PREJUDICE

Evening Post, Volume CXXVII, Issue 117, 20 May 1939, Page 8

EXPLOITING AN OLD PREJUDICE

Where a product passes through many processes before reaching the consumer it is usually difficult for the public to assess the intermediate costs. So it often happens that producers of the raw material or buyers of the finished article think that someone between is exploiting them both. The "middleman" is accused —the middleman being anyone except the person making the accusation. This is an old and popular prejudice and, while there may be occasional justification for it, on the whole it is unwarranted. In talking recently of people who were "exploiting the wool grower" and had "exploited the dairy farmer" the Prime Minister was exploiting this prejudice. His reply to the request of the Associated Chambers of Commerce for an elaboration of the state.ment was not a justification but an j evasion. It is regrettable, indeed, that such charges should be made. The merchants handling dairy produce gave real and valuable service in building up a great export trade. They explored and developed markets, carried the risks of price fluctuations and, with the banks and shipping companies, arranged finance and transport. For this service they received-a profit, but unless they knew their business well and carried it out efficiently, the profit might be converted into a loss. $ It was not easy money. Notv the Marketing Department does the same work, but not without cost. It has the advantage of a monopoly and the benefit of cheap money from the Reserve Bank. Even with these advantages the savings made are not such as to warrant a charge against the former merchants of exploitation. And it must be remembered that the merchants never had behind them the finances of the State and the right to charge a quarter of a million to the public for one year's marketing, or perhaps leave a deficit of a million in a State account if returns failed to Cover prices paid for produce. If the marketing of wool is taken from those who now handle it, someone will have to do the work and be paid for it. A State department will have to establish an organisation to sell the wool in the markets of the world and if it is to do this efficiently it will need to build up experienced staffs. It may effect econmnies; no one would contend that existing marketing methods are the last word. With unlimited statutory powers, such as merchants have not, improvements may be effected. Again they may j not be. Governments have tried to do the work of private enterprise in various industries and trades and have sometimes failed badly. The successes have certainly never been so brilliant as to provide proof for a charge of private exploitation. Making profits out of State businesses (where private competition affords a check on charges) is in fact not so easy as making political capital out of catch phrases.