WHY PRICES RISE

Greymouth Evening Star, 1 April 1920, Page 3

WHY PRICES RISE

CAUSES AND REMEDY. PROFESSOR MURPHY'S IDEA

An address on "The Problem of the Cost of Living/', a subject of vital interest to* all, was delivered by Professor 73. E. Murphy in Wellington, under the auspices of the W.C.T.U. The speaker said that he proposed to divide the subject into three headings—the problem, the causes, and the remedy. The cost of living had been defined as the cost of the necessaries which formed the standards of the masses of the people. From the beginning of the present centurv up to 1912 or 1913, the cost of living had risen from 13 to 16 per cent., and when the war broke out the cost of living bounded up to almost double. The Government Statistician's figures did not show the whole increase of the cost of living, for they were founded upon the three food groups, and upon rent, whereas the greatest, increase in prices had been in the vast range of imported articles in regard to which it was almost, impossible to obtain reliable data.

REASON FOR THE JUMP. Why had the price level doubled during the war years? A price was an exchange ot money for goods, an exchange of goods for goods was a barter, and speaking generally the vast proportion of money was in circulation on offer for goods, and at the same time goods were on offer for money, it' the aggregate of money

offered exceeded the aggregate o£ goods offered, the cost of living would increase, and to his mind the rise in the cost of living was due to the fact that the supply of money exceeded the supply of. goods. In 1910-13 the average money in circulation in New Zealand ' was £1,000,000; in 1914,

£1,900,000; in 1915, £2,800,000; in 1910, £4,000,000; in 19.17, £5,000,000; in 1918, £0,000,000; and in 1919, £7,000,000. The money supply had been vastly increased, the goods supply had not ; on the contrary, in fact, and therefore there was more money to do the same amount of work. The price in terms of money must rise, and the continual, injection of an increasing volume of depreciating paper money into the currency must eve.] 1 force the cost upwards, and so long as there was over-production of money and under-production of goods, no amount of Board of: Trade rulings no amount of insincerity or humbug, would make a penn'orth of difference. Certainly the country was reeking with money, but it was shody money, and the pouring of yet more into circulation could only force up the price of living further.

THE REMEDY

However, there was a remedy—■ to deflate the currency. The Premier had spoken many times of the troubles following the inflation of capital; let liim deflate it. There were practical ways in which it could be done. The men who allowed the inflation of currency to continue were the real profiteers, not the business men, who could not help benefiting* from the accumulating' of money. In'addition to the over-production of money there was, owing* to the war, an under-production of o-oods. While all the nations had been busy creating millions and billions of money their factories and their primary workers had

fallen behind in their output, and the result was that a great deal of money was offered for a diminished total of goods. Further, America and England were forced to supply to some extent the countries of Europe which had been blasted by the war and had not yet recovered and were, as it were, in a lethargic state.

MORE REASONS. Another factor which had pushed up the cost of living was that the working classes had rightly determined upon a better standard of living. That, to his mind, was the only praiseworthy factor of all. "Go-slow" was yet another factor, which both employer and labour were responsible for, but the employee was often shortsighted anil could not see that more output meant more -profits for his employer, more investment, more demand for labour, and, following naturally, greater output and cheapened goods, which would do their part in bringing clown the cost of living. Extravaganee -was undoubtedly another of the causes, and the demand for luxuries had switched a large proportion of labour off the production of necessaries to the production of gimcrack goods. It was largely owing to the stupidity and apathy of the people that the advertiser and business man were able to push forward such goods. Tlu> protective tariff system also played its part, for the foreigner did not pay the tax; the people did so in swollen juices.

The currency must be deflated (concluded Professor Murphy), production of goods must be stimulated, and the people must live within their incomes, putting' aside their desire for rubbishly goods and amusement, and a revision must be made in the tariff svstem.