No Need for Higher Wages, Says Economist

Evening Star, Issue 26153, 15 July 1947, Page 4

No Need for Higher Wages, Says Economist

(P.A.) WELLINGTON, July 15. Closely cross-examined by Mr K. Baxter, appearing for the Federation of Labour, Professor A. H. Tocker, in the Arbitration Court to-day at the resumed hearing of the application for a general pronouncement on wage rates, provided an exposition of the economist’s opinion on the dangers of inflation “which might overwhelm the lot of us.” Professor Tocker said that he had not received instructions from the New Zealand Manufacturers’ Federation in preparing, his evidence. He had appeared in the Arbitration Court four or five times in the past, and on no occasion had he advocated a general increase in wages. Mr Baxter: Under what circumstances would you advocate higher wage rates? Professor Tocker: I don’t think it is necessary to do so. The demand for labour will look after wage rates. . Mr Justice Tyndall: Irrespective of what this court does? —Yes, sir. I’ve always held the view that this court determines only minimum wages. The witness said he did not consider that farm wages during the 1930’s should have been increased. Farming returns had then dropped 50 per cent., and the farmer could not have paid increased wages. Ho did not see where farm wages would come from apart from the sale of farm products. In compiling comparative tables for his evidence he was not influenced by cou-

sideration that wage rates were lowest in 1938 and highest now, for wages during the depression were lower than in 1938. He had chosen 1938 partly because inflation began in June, 1938, and partly in order to. draw pre-war and post-war comparisons. SAVINGS BANK DEPOSITS. Mr Baxter asked several questions about the effect of Post Office Savings Bank deposits being borrowed by the Government—which the witness claimed was a cause of inflation—or being left there, or used to buy State and private houses’’ freehold. Large deposits constituted a menace in more than one way as an encouragement to inflation, said Professor Tocker. Mr Baxter asked whether the witness was aware that many large accounts had been transferred from the trading banks to the savings banks. Professor Tocker said that if that were so it was not a good thing, He did not think that the Post Office Savings Bank held; anything like enough liquid assets to meet substantial withdrawals, and the Government might have to borrow from the Reserve Bank to meet any sudden heavy withdrawals. The effect of freezing deposits at present would be very slight in the prevention of inflation. The people themselves practically froze deposits, because they were not withdrawing their money to any great comparative extent. Freezing a third of the deposits would be a corrective to inflation. That had already occurred, but not for the future inflationary tendency.