THE GOOSE THAT LAYS STERLING EGGS

Evening Post, Volume CXXVIII, Issue 45, 22 August 1939, Page 8

THE GOOSE THAT LAYS STERLING EGGS

Partly by quoting figures of the Government Statistician, and partly by making an arbitrary estimate of the cost of the 40-hour week, Sir W. D. Hunt calculates that farmers' costs have risen by at least 10 per cent, in the last couple of years, while during the last twelve monthspastoral and dairy produce export prices have fallen by a further 13 points. If the gap between the outgoings and the income continues to expand in this manner, the business —whether a farm or a factory—will ultimately become insolvent and will cease to produce. As the excess of outgoings over income increases in an industry, whether primary or secondary, the producers who are on the margin of equipoise between costs and returns find themselves pushed over the margin on the wrong side, and cease operations; these "marginal producers" have been dropping out of farming for some time, leaving farms that cannot be sold and Crown leaseholds for which no bid is forthcoming. If it were merely a matter of pitying so many unfortunate farmers, that would be bad enough. But New Zealand is so dependent on exports (practically all of the exports are farm produce) that, in the proportion in which the farming industry goes out of business, New Zealand goes out of business oversea. Without the sterling created by farm produce sales oversea, New Zealand's external buying must cease. "Very well, then," replies the thoughtless, "let us make all our imports ourselves." But it cannot be done. Some things we cannot make; and much of what we can make depends on imports of materials raw 7 or partly manufactured—that is, on sterling. No farm exports, no sterling. And no sterling means hamstringing New Zealand manufacturers and putting people on rations. Because of the fact that not only the farmers but also the manufacturers and the public are all in the same rocking boat. Sir W. D. Hunt invites the Government to make a fresh attempt to shape events, failing which events will shape the Government and the country. Once again he points out that, unless steps are taken to low rer the internal costs that are slowing up farming and slowing up New Zealand, the country will drift down the rapids of falling exports and sterling shortage, until economic laws step in and force an adjustment by reducing the value of the local currency. This means inflation with all its well-known consequences. Already our export position and our credit oversea are so affected that the market value of the New Zealand pound "is probably nearer £NZI4O for £100 sterling" than the official £NZI2S for £100 sterling. Neglect of internal costs means destroying our external purchasing power without being prepared for replacement of goods by local manufacturing, because a people which enjoys the highest or near-highest export trade per head in the world cannot pass i quickly from an export economy to self-containment, and, apart from the time factor, the transfer is far easier if made without loss of credit abroad than if made hy the road : of self-induced deprivation and noverty. The Government, of course, knows all about costs. Mr. Nash led the dairy farmers to believe that the guaranteed price would follow costs. But when his own Advisory j Committee reported to him the price j based on costs, he took one glance at it and fled. Yet in fleeing lies no safety. Neglected costs produce their own Nemesis. If political fear of touching the standard of living i stereotype? the present policy of drift, the worse for the standard of living will the ultimate consequences be.