The Gisborne Times THURSDAY, JULY 2, 1936. WHAT WOULD RE LEGITIMATE RECOMPENSE?

Gisborne Times, Volume LXXXIV, Issue 12903, 2 July 1936, Page 4

The Gisborne Times THURSDAY, JULY 2, 1936. WHAT WOULD RE LEGITIMATE RECOMPENSE?

Tho Government is, . plainiy; very perturbed over the threat of. higher prieos as a sequel to the restoration ol wages “cuts” and the movement f 1 have the. working week shortened. Only a few days ago, the-Prime Minister told tho country that it was net suggested that, if costs of production rose, those who had to pay tho added, costs in the shape of wage':! should go without any recompense. What was aimed at, however. was that prices should, in such an event, be raised only to .a legitimate extent. Mr Savage apparent--1•' has not taken into consideration the fact that, in the secondary industries. higher costs for materials a- well as higher wages will enter into the new price levels. There will be agreement with him that the policy of every government should be that everybody should get a square deal. On the other hand, added costs cannot fail to be reflected in pricelevels. ft would seem that .the Government now fears that manufacturers and traders will use higher wages and shorter hours as a lever to manipulate the exploitation of the consumer and the user. If evidence should bo found of exploitation in

any line of business, the Government will, of course, be expected to go to the public's rescue. Exploitation should be easy to trace with the help of tho State taxation department. What will make things quite awkward enough, without taking into account any stray case of exploitation which tho authorities may discover, will bo tho increase in price levels which will be legitimate. In soihe lines of business, as, for example, chain stores, keen competition can be depended upon to keep tho prices of tho commodities which they stock from mounting appreciably. The position is, however, likely to be very different as regards, say, the cost of building, in which not only will the costs of all materials be higher, but also the wages bill. Air Savage, ;n laying down the Government’s policy on tho matter originally, suggested that if, for argument’s sake, the buying power of the Dominion aggregated £100,000.000 more could not

possibly bo paid for goods and services by the people as a whole. As it so happens, however, in every year's •turnover expenditure ol capital, even if only in the shape of savings. occurs as well as expenditure out of profits and earnings. It requires also to. be remembered that, in the case of the enhancement of price levels above the ratio of purchasing power, the consumers and users would have to do without many tilings and, consequently, the industries which would be affected would soon fall on evil day.*s again. JTdueiiin~ on t!ie matter this week, Mr Savage said that the Government would not hesitate to take direct competitive action if prices rose »o wliat might he described as an unnecessarily high level. Some idea ol what it has in mind was afforded by a further statement to the effect that “if wo raise wages and decrease hours and then allow prices to go up in the samo.ratio we will have altered nothing.” It is, of course, certain that, in many cases, price levels will climb in a like ratio to costs of puduction. This, however, will not be the position where faster, machinery is installed and a much larger turnover is gained. Seemingly, it is the. small manufacturer and the snunl trader who will suffer most under any regulations restrictive as to increase in prices. Tho Government’s .throat to enter into business competitively where it holds prices become unnecessarily high is interesting, but will not bo taken very seriously until some official evidence of deliberate exploitation is forthcoming.