THE FARMER.

Grey River Argus, 3 September 1927, Page 1 (Supplement)

THE FARMER.

WHY HE IS POOR. HIGH WAGES NOT THE CAUSE. LAND INFLATION AND INTEREST. The questions which Professor Belshaw, Professor of Economics at Auckland University, attempted to answer in his address to the Chamber of Commerce at its mid-day gathering were:—ls the real net income of the majority of the farmers greater or less i han in the years prior to the war, and what factors have led to the pre sent economic position of the farmer? The real net income of the farmer is obtained by subtracting farm cost.from gross money income and dividing the balance by “the retail price index of the commodities which the farmer and his family consume.” Taking the selling price of exports as a fair measure of charges on tho tarmer’s gross income, Professor Belshaw showed by elaborate statistical tables that between 1917 and 1927 the retail cost of household goods rose in proportion to the selling prices of produce. As to farm costs other tables compiled by the Professor showed that compared with pre-war conditions the dairy farmer benefited from the rela tion between the export prices and wages during the period 1914-27 except for the two last years; and the farming community as a whole benefited in the same way except in the years 1922-23 and 1926. The purchasng power of money had been less than

in 1914 during the period 1918-27. Luus though the failure of wages to .ail with prices in 1926-27 had been -urdensome to farmers., “it must not be overlooked that the wage-earner most decidedly did not share proper tionally the gains of the years of city. ” A reduction of wages to I the extent of less than ten per cent in 1126 would have practically restored . he position as it was in 1914. .Such a reduction would have saved each farmer less than £l5 a year; and Professor Belshaw s conclusion was that “if other cost price relation | -hips were the same as in 1914, the present burden of wages would scare eiy be sufficient to account for the existing depression. ’ ’ A similar statistical investigation into cost of producers’ material show ed that except for a short period, the , disparity between prices of producers’ goods and farm commodities had not ! been an important element in the de

pression. SEEKING THE CAUSE. Where then was the source of the present depression io be found? Professor Belshaw's answer—supported again by carefully compiled statistical evidence —was that two causes of tho difficulties against which, the farmers were struggling were the post-war inflation of land values and the heavy interest charge on mortgages. “Since 1920,” said the Professor in conclusion, “an increasing share of the products of the soil has been going to those who have lent money to the farmer. To bring the farming community back to its 1914 position this charge would have to be reduced by approximately one-half. The disparity between retail prices and export prices has reacted prejudicially farmers as a whole during almost the whole period since 1917. These two conditions are the primary cause of the present depression.” the wage factor.

As regards wages the Professor repeated that he could not accept the wages-rate as a factor of primary importance in the problem. “While a fall in wages in 1926 would have relieved the situation somewhat,” said he, “the worker did not share appreciably in the benefits of boom years Any reduction in wages which the worker is likely to accept will not materially affect the situation. An efficient system of credit will do much to relieve the position, but the only complete remedy is the. slow liquidation of the over-valuation and overmortgaging of land, painful and unacceptable as it may be.”