The Eveningt Star THURSDAY, SEPTEMBER 11, 1930. BUYING AND SELLING.

Evening Star, Issue 20586, 11 September 1930, Page 10

The Eveningt Star THURSDAY, SEPTEMBER 11, 1930. BUYING AND SELLING.

The annual report of tho Department of Industries and Commerce states that “the 31st March, 1930, marks the close of a year in which, as far as overseas trade is concerned, there were two outstanding features—namely, a more or less continuous fall in tho prices of some of our principal primary products in the world’s markets, and a substantial increase in importations of all kinds of commodities. Tho result has had a marked effect upon economic conditions within the dominion, and, in particular, upon our trade balance and our banking figures. The decline in the total value of our exports especially provides eloquent evidence of the effect that prices have on the spending power of the community and outho general prosperity of the country.” As compared with the previous year, exports dropped in round numbers from £57,000,000 t0'£49,000,000. At the same time imports rose from £45,000,000 to £49,000,000. There was a slight adverse trade balance to compare with a favourable balance of £12,000,000 the year before. Presumably the knowledge of this, together with the state of the exchange market, will bring about a reduction of imports, both as to volume and price, for, as tho report states, tho spending power of tho community has been ( lessened. The importance of the subject must be our excuse for frequent return to the question of whether sufficient investigation is being made to ascertain whether our economic system is calculated to conserve that spending power against unnecessary depletion and against very unequal depletion. Having less to spend, it becomes of paramount importance that all in the community should be able to spend what they have to tho utmost advantage. Wo should bo enabled to get the utmost value for our outlay. Do we?’ It seems inevitable that the cost of living must come down. Has it begun to do so here? There are worldwide complaints of the gap between retail prices and world prices of staple commodities. Tho producer is ■'ho backbone of this country at any rate. If his production is at a loss, how . long can not only he, but the rest of us, go on spending on a basis which is obsolete because of an entirely false relation between two sets of prices ? Admittedly the process of readjustment between them cannot be forced without entailing dislocation; but it should not be artificially retarded by some of tho methods known and practised in polities and in trade. Politics can give us “sheltered” industries, which usually moan dear prices to the consumer. Trade also can show its sheltered industries and consequent dear prices to the consumer. Tariffs are not necessary in the latter case; the replacement of competition by the formation of associations and the observance of agreements can produce the desired result of the fixing of markets on a level deemed desirable. But when one gets a combination of politics and trade, of protective tariffs and traders’ Unanimity, the results are' interesting. One of the first necessaries nf life is the lopf. According to the ‘Australasian’ 1 of September C, “tho Victorian Mill-owners’ Association price for flour is £lO for 2,0001 b (the trade ton) delivered Melbourne or suburbs within fourteen days of order. A cash discount of 5s a ton is allowed on orders , for three tons or more.” On the same day tho Dunedin papers quoted tho price of local flour at £l7 5s pci - ton in 2001 b bags, rising to £l9 per ton in 251 b bags. To ensure New Zealand being self-supporting as to breadstuffs there is a sliding scale duty on wheat and flour. This duty makes Australian flour landed here slightly dearer than New Zealand flour. But it is being imported, though not because there 'is any shortage, of New Zealand production, there being ample supplies of local wheat not gristed. The reason is tho bakers’ affair. (Incidentally it may be stated that in Dunedin competition among bakers is keen at present, and small margins of profit are worked upon.) The tariff encouraged tho New Zealand wheat grower to produce enough wheat to render imports unnecessary, but it docs not ensure him being able to sell us all we require; nor can he sell it elsewhere, export being an economic impossibility. The report of the Department of Industries and Commerce states Notwithstanding the ample supplies of New Zealand wheat available, importations continue, although on a smaller scale than in previous years. During tho year (1929) 254,491 bushels of wheat and 9,771 tons of flour wore imported into the dominion. Together the importations for the year 1929 represent a quantity approximately equivalent to Now Zealand’s requirements for one month.” Wo may add that the year 1930 is showing tho same characteristics. Reference to current local port statistics are very convincing on that head. It appears to us that the slidingscale tariff has not succeeded—unless its object was to make tho loaf dear. Yet tho Parliamentary Committee thought otherwise. The committee (say the report) was unanimously of opinion that tho dominion should bo self-sup-porting as to wheat requirements. Tho wheat growers concurred; so did the millers; but not the bakers (which presumably means their customers). The committee decided that the New Zealand wheat growers needed protection, and that the form it should take should be the present sliding-scale duties. They are largely ineffective so far as grower and miller are concerned, but not in so far as the loaf-purchaser is concerned. Yet tho committee’s order of reference on this particular point reads; “ What form of protection or State assistance (if any) would effect that object (tho safeguarding of nqr wheat growers) without unduly adding to the cost of wheat-flour bread, fowl wheat, and wheat offal to tho users?” Space precludes reference to the poultry and pig industries, and we puss on to the committee’s recommendation that the Department of Industries and Commerce fee Asked Jo investigate the

operations of the milling industry to ascertain whether or not the cost oi production of flour can bo reduced. The Department of Industries and Commerce evidently has one primary qualification for its job, because its report contains a very up-to-date section under the head of ‘ Rationalisation, which it defines as “ the methods of technique and of organisation designed to secure the minimum waste of, either effort or material.” It is “by its very nature a continuous process ” (which flour-milling' should be, and is not here) ; it lias been associated in the public mind “with all sorts of mergers, trusts, and financial arrangements that do not necessarily fall within its scope ”; it must bo carried out here in New Zealand if our local industries aro to compete with commodities produced overseas; it is an economic necessity which will increase the well-being of the community as a whole. W° f° r * bear to quote further from the report, primarily out of charity to the department. B’or we are convinced that its recommendations on the flour-milling industry, solicited by tho Parliamentary Committee, will violently contradict tho impeccable theories enunciated in this section of its annual report. It is perhaps invidious to single out one particular item in the cost of living. Much might bo said about saleyard rings, the retail price of meat in the butchers’ shops, and the savings effected by those few fortunate consumers who can purchase direct from exporting concerns, thereby affording perhaps the most vivid and simple instance of . the gap between retail prices and those for primary products. And much might be written of another side of the questiou altogether, yet inseparably related, currency control. As soon as Sir Otto Niemeyer landed in New Zealand he declared banking reform to be New Zealand’s first need. This has a great deal to do with price levels. Sir Josiah Stamp, ono of the world’s leading bankers, declares the problem of the price level to be the most important single problem of our age—“the fundamental solution of trade depression,'unemployment, labour unrest, class hatred, high taxation, and the rest.” One of his most arresting statements is that “ the change in the price level m the last three years (192528) has increased the burden of the National Debt by a thousand millions sterling, or added an invisible shilling to the British income tax.” Ho complains that such a statement is treated on much tho same level as an interesting after-dinner anecdote. It is, because wo do not understand—we aro only now beginning to realise dimly that this is the most bitterly practical of all questions.