THE COST OF LIVING.

Lyttelton Times, Volume CXVIII, Issue 18411, 18 May 1920, Page 4

THE COST OF LIVING.

An editorial article on the cost of living whioh appears in the current number of “ Accounting and Commerce,” the official organ of the New Zealand Society of Accountants, is interesting from more points of view than one. In the first place the subject is very firmly, even dogmatically handled, and the article provides, as far as it goes, a very able summary of the best informed opinion regarding the causes of present economic difficulties, and the oondu tions of the problems that present themselves. Of even greater interest, because at is symptomatic of the exasperation which the futility of official expedients excites- in the minds of most intelligent people, is the frank and forcible character of the writer’s comments. The principal blame for the rapid rise in prices which has been experienced all over tho world since the •war started is placed at the door of the Governments which facilitated the inflation and dilution of currency. The authorisation of a non-convertible paper currency, according to the writer of the article, “ offered a tempting field of exploitation to the banking ring. It is a very profitable transaction to draw good interest on your lOU (a bank note is such) when .you can float nearly two millions of them at .a negligible cost of production. It is a much pleasanter thing when you can work tho same game to the tune of over seven millions.” The reference, of course, is to the increase in note circulation in New Zealand from £1,674,333 in \ 1913 to £7,254,412 in the last quarter of 1919, a period in which deposits wero doubled and the note issue was multiplied by 4s. Lenin is quoted as saying that tho best way to destroy the capitalist system is to debauch the currency, and the endorsement by Mr J. B. Keynes, a world-famous economist and financial expert, of the correctness of that view is also cited. It is pointed out by the writer of the article that the continual supply of new money stimulates tho demand for luxuries, and thus diverts capital from useful production. Professor Murphy's dictum that the world is suffering from an over-production of

money and under-production of goods is endorsed, and tho serious effect of the “go-slow ” labour policy on the cost of commodities is given full recognition. The theory of the Government Statistician that the cost of living in New Zealand had risen by about 63 per cent at the end of March last i 9 rejected with scorn. Tho writer quotes the London “Economist’s” index number to show that prices in Britain have risen between 200 and 300 per cent since 1911, and contends that if the increases in goods imported to New Zealand from Britain and other countries were included in the Government Statistician’s computations it would be shown that the increase in the cost of living in Now Zealand has been between 100 and 200 per cent. Among contributory causes to present conditions in New Zealand are cited “ the excessive multiplication of middlemen and distributing agencies,” and the existence of “ combines, especially rings of importing merchants, who are leagued to plunder tho consumer by artificially raising and keeping raised the price of goods.” While we are not prepared to dispute the writer’s knowledge of business organisation in this country, and heartily agree with him that New Zealand’s “ drastic legislation ” on this subject has been a “confessed and ludicrous failure,” we think he has rather overstated the case in some directions, particularly in his. estimate of the extent to which prices have been raised in this country. But oven if the official estimate he accepted, the riso has been large enough in all conscience, and it is ir. the nature of things that the organ of a. section of tho professional or middle class should feel particularly strongly on tho matter. That tho economic upheaval to which tho world has been subjected has not led to more serious social consequences than has been tho caso has been duo mainly to the fact that the steady process of currency inflation has made possible large increases in wages. It is those classes of the community that stand outside the scope of Arbitration Court’s and wagp boards on tho One hfind and outside the ranks of those who can pass increased charges on to the consumer on the other that' have suffered most inconvenience under the now conditions. The best brains of the nation aro comprised in the classes which are now being ground between the upper atui nether millstones of the economic machine, and those classes aro beginning to make their voice heard. They should bo listened to, for the world is face to face with unprecedented dangers, and only tho best and most unselfish counsel of all classes can avert an eventual catastrophe.