The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, FEBRUARY 17, 1930.

Hokitika Guardian, 17 February 1930, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, FEBRUARY 17, 1930.

THE 1 ECONOMIC PROBLEM. In our commercial letter from Wellington, published on Saturday, the correspondent wrote: “Raw wool is cheap, but wool goods are dear, which means that the costs of distribution are out of all proportion to the costs of production. The point of distribution should be the point of attack for wool growers, and the relatively high cost of wool goods in New Zealand will stand investigation.” Two days earlier in the cable messages, it was conveyed that at Melbourne oudge Beeby in the Arbitration Court, issued a warning that in view of the fall in prices of wool and other primary produce, a general reconstruction in Australia was inevitable. The unions must realise that lower wages were almost certain, and lie suggested smaller profits would pjrobnbly follow. Everything pointed to the fact that the present depression was not temporary but the result of post-war inflation.” These views no doubt give a correct idea of the economic problem which both Australia and New Zealand are facing. With it all is hound up the result in the degree of unemployment prevailing, and so we may take it, the economic problem is the root of the issue. Both the Commonwealth and the Dominion are going to he millions short in their income hv reason of the drop in the price of wool. There are artificial efforts suggested to meet the situation, hut the inexorable laws of supply and demand looms up, and it has to he confessed there is no royal road to circumvent the situation. The proposal to withhold supplies from the sales is not likely to be very helpful. Buyers know

tii© real position, and if the price does not suit them, can afford to wait, buying piecemeal;till prices do suit them. Wool, more or less, is often held over for various reasons, so that the carry over is invaiably considerable, and with the general state of trade, it apjears likely that with the increase in he flocks, the supply is going to greaty exceed the demand. On those grounds, prices are not going to advance materially, and that conclus on is becoming general. It was realised simultaneously by Judge Beeby and our correspondent from two different angles. His Honour felt the situation would jimpress itself on the . labour unions and that a decline in wages was inevitable. It can be well understood that this will not he palletable, and will .be strongly resisted. This means that the cost of manufacture has to. be reviewed. By placing cheaper goods on the market, a better demand will be ensured, and with it, the consumption of more wool. There we see the logical action of supply and demand, and in that movement the. real cure for the present stringency in wool prices. What affects wool, also affects other commodities in the same way. Wool being necessary primarily for domestic purposes can have its restrictive use when prices are high, and that very restriction limits the demand. Other staple productions are in the same category, and'the economic issue is involved similarly. The question is, where is the sacrifice to begin, and who will make the first move? An issue, such as this should be faced sensibly and with a due regard for all that is involved. Producer, manufacturer, ailct labourer might well got together and study the problem, from the viewpoint of euch, By such a means a better perspective can be obtained, and a more reasonable course of action result, Anything attempted should be by a gradual tapering off policy with the object of meeting the situation with the least ham to all concerned.