INTERNAL PRICES.

Evening Star, Issue 22379, 1 July 1936, Page 8

INTERNAL PRICES.

So far it has been all plain sailing for the Government in getting its policy measures passed through Parliament. Now the test is about to come when the effects of the new legislation will be revealed. Mr M. Silverstone, at a recent meeting-of the Otago Hospital Board, declared that there would be a heavy rise in internal prices following the new order. That was stating the obvious, yet apparently its inevitability had not come home to many people. Ministers from time to time have stated that prices will not be allowed to rise concurrently with the greater costs of production occasioned by the forty-hour week and higher wages, but how the Government is to control the position in that way it is difficult to see. The Prime Minister himself is dubious on' the matter, for he said in Wellington last evening, following a Cabinet meeting, that if increases in the prices of commodities because of the rise of wages cannot be prevented by the regulations it will be done by State competition, a method which has had many ‘ disastrous sequences in countries where it has been tried, particularly in Australia, where the enormous losses incurred by that country’s control of , State shipping and in other industrial enterprises are still fresh in the memory of those who follow these questions. A favourite argument of Ministers is that by the enhanced wage bill to be paid by industry, and' the employment of more hands, with the prosecution of an ambitious public works policy, the spending power of the people will be substantially strengthened, so that what the employers lose on the swings they will gain on the roundabouts. That is only partially the case. It is true that with more money in circulation the business community will benefit, but to assume that all the wage increases are to be spent as they are earned is a mistake. The returns of the savings banks and other institutions show that ‘the Dominion contains a large number of thrifty people, and it is safe to assume that a considerable amount of the extra money will be devoted, to making provision for the future. It is further clear that if the household bills of the worker are to be much heavier than they are at present he will not benefit under the new conditions to the extent that he anticipated. Then there is the case of the people of small means who are not wage earners and who will suffer hardship from the rise in price levels. It is known that many businesses held their own in the depression years with the greatest of difficulty. They are still working on the slenderest of margins, and it is obvious that a big increase in overhead must, to put it mildly, cause them grave embarrassment. Competition, unhampered by, unnecessary restrictions, is the life of trade, and anything that tends to discourage private enterprise must be detrimental to the Dominion in the long run. The Government, however, has thrown the doctrine of free competition into the discard, and is committed to a policy of regulation, with the implication of price-fixing. It is a dangerous proceeding, and the result will depend in great measure on the wisdom with which the new legislation is applied. The sincerity of Ministers is not in question. What does give rise to uneasiness is the feeling that a venture has been made into an uncharted sea, and neither the members of the Cabinet nor anyone else is in a position to say whether the obvious perils will be passed and a safe haven reached.