Greymouth Evening Star. WEDNESDAY, FEBRUARY 5, 1947. Danger of Inflation

Greymouth Evening Star, 5 February 1947, Page 6

Greymouth Evening Star. WEDNESDAY, FEBRUARY 5, 1947. Danger of Inflation

JNFLATION, actual and potential, is causing concern in Britain. Inflation can come about when spending power rises more quickly than the value of goods available. Yet, though these conditions prevailed throughout the war and have prevailed since, serious inflation has been prevented by a number of devices, including price controls, national savings and the holding back of post-war credits and war damage payments. But the effect of these measures has been to freeze, not to remove, increases in spending power. The danger is that this power may be freed or may strain against present claims before the supply of goods can be Increased enough to absorb it without an undue rise in prices. An increase in note circulation has always been considered a sign of inflation. ■ Since September, 1939, the British Treasury note issue has been raised in 17 steps from £580,000,000 to £1,450,000,000. But the increase in note circulation in the past year has been only just above three per cent, and the reflux of currency this year since the Christmas holidays has been.so heavy that even the most conservative banking authorities believe that the Government, may soon be in a position to contemplate a reduction in the fiduciary issue.

The overall rise of 89 per cent, in earnings between October, 1938, and July, 1946, is attributable to a variety of factors, such as higher wages, more overtime and an increase in the numbers employed. Thm increase in spending power is undoubtedly a major factoi’ in the present situation. Fortunately, recent utterances by trade union leaders reveal that they realise that a balance has to be struck between ready cash —whether it is in the form of wages, salaries or returns from investments —and the amount of goods available. Economists see in this attitude a hopeful sign that through the formulation of a national, wages policy the only sure path out of the course of the present inflationary danger will be taken. A New Local Authority QNE aspect of the Government’s decision to grant exclusive trading rights to the Hutt Valley Consumers’ Cooperative Society that should not escape the attention of the public is that, in effect, there has been created a new form of local authority. A private association is to have what amount to special taxing and rating rights for the establishment and maintenance of community centres. As has been pointed out in the Wellington press, hitherto the purposes of such centres have been financed either by voluntary subscriptions or by taxes or rates levied by the central or local government. Now the consumer of bacon and eggs* is to be asked to pay for his social hall while he pays for his bacon and eggs. He may want to spend his money in his own way. and. if so, he will be put to extraordinary inconvenience in order to do so. The essence of the co-operative movement is that it must be voluntary. Now, according to the Co-operative Society’s figures, there are at least 25 per cent, of the residents in the Hutt Valley area who do not desire to enter the co-operative scheme there —and there may be many more who will wish to withdraw their support when the effects of the first flush of subtle propaganda diminish. These people will then, in effect, be compulsorily rated by a. private association to pay for services which apparently they do not want and do not desire to support and, what is more, in a manner that has no legislative sanction.

Another question which is worth more than passing consideration is why an association which claims to have the support of the residents should require monopoly trading rights. Surely if it continues to retain that interest it should have no need of such rights. What has it to fear from competition, which alone guarantees the best service, higher quality, a wider range of choice and lower prices? That question has not been answered, and probably it never will be. Indeed it is difficult to escape the conclusion that the Government has taken advantage of an opportunity to drive another Socialistic wedge into the trade structure. The co-operative movement is in many respects an excellent movement. .Co-op-erative societies are free to establish themselves anywhere, but they should not be allowed to hold a monopoly. By granting such, a society exclusive rights and thus with a stroke of the pen making a radical change in the country’s economic and social laws, the Government has acted, against the common interest and at the same time has, in effect, done a grave disservice to a great movement. One more step has been taken towards the goal of “ultimate Socialism.”