The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, MAY 7, 1934. CAUSE AND EFFECT

Hokitika Guardian, 7 May 1934, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. MONDAY, MAY 7, 1934. CAUSE AND EFFECT

> 1 he,.,result .of the efforts*' to restore prosperity in c«e muu. oi.ui.es is u.ier—y to iu.iv/u . A nere u,c many pauses t i oi .is riie 1)1 aii ing wc ■»ciops. iiie- crusiai tesj. to oc in u.e po.icy r.u- restoring me parity between rue prices 01 K.ii.i 'prouucts anci tno prices or ti.o products Unci services oi » ,j at farmers niust uuy. Tlie L.rmer in the United iScat.es ukc those 111 otner counciKs luiivuing agricultural pursuits, is having a very ußncult time, clue to depressed prices, it is recognised in tno States that tlio relatively ion- purchasing power of the farm population is one or the chief factors of the depression. The same applies to New Zealand. Lately we have witnessed the j uplift from the better wurl prices, and »if dairy produce came similarly into the limelight, there is the belief that all would be well with the Dominion. It has to bo recognised nevertheless that a rise in the prices of farm products will not in itself prove the complete remedy. The gain in prices must he relative to other costs to better the farmer in reality. In point of fact there must be an increase in the production of wealth, as the surest means of increasing the income cf any member of the industrial circle without reducing the compensation of another. An all round increase in itself will not cure the situation. Nor will the creation of more money. The National Economy League of U.S.A. remarks: “It will be said that if till the unemployed were put hack to work and ail wages restored to the 1929 level, tho national income would be fully restored. Belief that this can be done is tho obsession which has dominated the country for four years. It is based upon a fallacious idea, of the control which governments can exercise over economic relations. It- fails to grasp the truth that business consists of an exchange of services, that the real purchasing power of the markets exists in the products and services offered in trade, and that the depression results from unbalanced relations. It assumes that- purchasing power can be bad from some source outside the exchanges themselves, and that nothing is needed 1 but the •authority of the Government j to advance everybody's pay. The cold j truth is that our pay comes from each other, and that to advance everybody’s compensation alike would maintain the disparity which has caused the blockade of trade. “The problem is something more than the raising of prices. The problem is how to raise some prices and how to hold down and eve n to depress other prices. There are gaps to he closed—gaps which the depression has caused. Not only should farm and raw materials rise, but retail prices require to be held down and the -costs of production need lowering. But the desire to increase prices is general, and what tho f. lllll community may gain in one way is counter balanced bv a rise in commodities be must purchase. So with higher wages, they arc counter balanced by the higher cost of living—and a vicious circle results which negatives all the good intentions to decreased employment and the decreased demand of consumers faced with the higher prices. The fault in the policy is an

erroneous conception of the real sotirce of purchasing power. It will be seen therefore that America is gradually realising the magnitude of the problem to he solved, and every turn seems to call for fresh plans to combat tlie inherent difficulty of meeting the issue by artificial means.