WELLINGTON NEWS

Hokitika Guardian, 28 September 1928, Page 2

WELLINGTON NEWS

(Special to Guardian."> SOME BUSINESS PROBLEMS. WELLINGTON, September 26. Some perplexing problems are troubling business people and others and recently a. £ood deal of space has been devoted to economic questions by many of the metropolitan newspapers. Under the caption- “ AVhut is Wrong? V the ‘‘Evening Post ” has an article dealing with the state of trade and the complaints of retailers of dull times. There is. more ; money in the country and .yet loss ‘tradie, iand' that is 'what is puzzling .people', » , The export and import returns;;for, ' the twelve’ months ended August 31st last showed exports at £55, 79Q,{)p3-!-qnd imports' at £44,571,626, ; s&!tnat exports exceeded imports by £1;,218y.727, that is'to say that we bought less than we sold overseas. The banking ret urns for" the June; quarter the fact that the deposits both fixed ..anti free were in excess of the. advances, that means that the banks were in debt, to the public which tvasl liotythe case ._a year ago. There is believed to be' more money in the country than a year ,v ago,: yet business is dull, but.is this true? If we take the hgures fqr the; Jear ; alone .. when obviously there should be an increase of credit in the. country, but the year’s figures cannot be segregated, they must be taken in conjunction with the figures of preceding years. The truth is that the country lias not whojly recovered from the slump ’of 1920-21. There was a magnificent spurt in 1925 but the fjivourabld'export irevenue; was partly used for paying °ff the bank debt hut more of it was squandered in luxury, find the set-back of . 1926 was felt severely.' We have again a favourable export revenue and still trade is dull and unemployment still a disturbing factor. It is safe to assert that a. good deal of the trade balance has been devoted to repaying accumulated debt, and taxation has absorbed a good deal. In addition to the exports over imports,; the State borrowed £5,000,000 m London, in May last and one or two lodal bodies-raided small loans in London. Even with the inflow of credit added to the excess ;°f exports trade is quiet. Tiie speptiing-power of the com-; munity according to-the'lasi banking returns was less than in the previous year. ’ it is not correct to say that there is more money in the country, that is more credit or purchasing power than before. People cannot i filmy debt arid also have money to spend. Another point is that there is a want of balance between, internal and external prjfesji>• Tfie(latter haye fallen ; jm.t the fornier- 'except for a few 'Commodities . remain ; jit or near .the immediate post-war''’level.. Overhead costs in most industries or trades have not varied while labour costs in some cases are higher. . For what we sell overseas we get comparatively low and competitive prices, and for goods and . services of New Zealand origin we have to pay high prices, especially for services fixed by the- Arbitration Court, . Imported goods With some exceptions are relatively cheaper, but the cost of distribution Of imported goods is high. The distributing side is overdone, that is to say there is an excess of retailers in almost every branch of retail trade and overhead expenses in the aggregate excessive. There is not trade enough to keep all the retailers going and naturally they regard trade as dull. In many industries the overhead costs in the aggregate are excessive and the only remedy appears to be merger or amalgamation, the alternative is bankruptcy or liquidation. With some people the Arbitration Court is sacrosanct, but the Court is nevertheless in no small measure' responsible for a percentage of the existing unemployment. The price of labour, like the price of commodities, must lie flexible, but the Court has insisted upon rigid prices. The report of the Department of Industries states that it has noted in iecent years a satisfactory development of the sentiment in favour of granting a buying preference for New Zealand made goods, out it is asserted that retailers as well as the public must be brought into sympathy with the object of supporting local industry. The public can be swayed by sentiment but the retailer or, trader who has to turn over goods at ar profit wants to buy on the cheapest market. It' is cheapness and quality, that actuate the trader in his dealings, and it is useless for manufacturers to place much hope of success in a slogan of sentiment. lhe same manufacturers would not hestitate to purchase American oy. German goods in preference to British on a. price concession. ’ Retailers are complaining ot the cash trading system whereby an individual or company guarantees the account of a customer receiving commission at. both ends. The borrower pays a commission for the loan while the retailer is hit for a discount of 12£ per cent. The retailers dislike this discount and instead of combining and ref using to pay so high a discount or any discount at all they 1 want Pailiament to protect them, which shows that retailers have a wishbone where the backbone ought to be.