THE FARMER.

Hawera Star, Volume XLVII, 30 August 1927, Page 7

THE FARMER.

WHY HE IS POOR. HIGH WAGES NOT THE CAUSE. LAND INFLATION AND INTEREST The questions which Professor Belshaw, Professor of Economies at Auckland University, attempted to answer in. his address to the Chamber of Coinmerce at its mid-day gathering were: Is the real net income of the majority of farmers greater or less than in the years prior to the war, and what factors have led to the economic position of* the farmer? The real net income of the farmers is obtained by subtracting farm costs 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 oil the farmer’s gross . income, Professor Belshavv showed by elaborate statistical tables that between 19d7 and 1927 the retail cost of household goods rose in proportion to the selling prices of produce. . As to farm costs, other tables complied by the Professor showed that as compared with pre-war conditions the dairy farmer benefited from the relation between, export prices and wages during the period 1914-27, except for the last two years; and the farming community as a. whole benefited in the same way except in the years 1922-23 and 1926. The purchasing power of money had been less than in 1914 during the period 1918-27. Thus though the failure of wages to fall with prices in 1926-27 had been burdensome to farmers, it must- not be overlooked that the wage-earner most decidedly did not share proportionately the gains of the years of prosperity.” A reduction of wages to the extent of less than ten per cent, in 1926 would .have practieallv restored the position as it was in 1914.

..Such a reduction would have saved each farmer less than £l3 a year; and Professor Belshaw’s conclusion was that “if other cost price relationships were the same as in 1914, the present burden of wages would scarcely be sufficient to account for the existing depression. ’ ’ .

A similar statistical investigation into cost of producers’ material showed that except for a short period, the disparity between prices of producers’ goods and farm commodities had not been, an important element in depression. Whore, then, was the source of the present depression to be found? Professor Belshaw’s answer—supported again by carefully compiled statistical evidence—was that the two causes of the difficulties against which the farmers were struggling were the postwar 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 191+ position this charge would have to be. reduced by approximately one-half. The disparity between retail prices and export prices has reacted prejudicially on farmers as* a whole during almost the whole period since 1917. These two conditions are the primary cause of the preset n depression.” 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 be prepared 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 slew liquidation of the over-valuation and over-mortgaging of land, painful and unacceptable as this may be. ”