INCREASED PRODUCTION.

Manawatu Standard, Volume L, Issue 74, 22 February 1930, Page 3

INCREASED PRODUCTION.

, (To tho Editor.) Sir, —In the correspondence column of your esteemed paper of this evening (February 20th) you publish a letter from Mr Andrew Guy which commences thus: “To meet the fall in the value of exports. New Zealand must increase production and economise.” * As regards tho “economising” I most heartily endorse his opinion, but I disagree with him entirely and absolutely regarding increased production. Tho fall in the value of our exports has been brought about entirely by increased production—not by the increased production of New Zealand alone, but by the increased productions of practically every producing nation or country in the world. Just suppose that we had double as much land under cultivation as we really have, and had produced double as much as we have produced, can Mr Guy show us how we should have benefited P More production still, pushed into markets already overstocked with more than demand can absorb, prices would havo dropped still lower (they may do so even yet). True, somebody would reap the benefit, but it would not be the producer. Overproduce, and tho consumer benefits; shorten production, and the producer benefits. lam not an advocate of raising prices by shortening production; I am merely stating the facts regarding the law of supply and demand.

In a separate column of your paper under the heading “Wool Sales,” I read thus: “Wool prices to-day are what they are because of increased production.” lam afraid, sir, that Air Guy is voicing a fairly general sentiment. “Increase your production and become more prosperous” seems to be the slogan of every leader of every clime. They seem to forget that every market everywhere is fully exploited and there are no more markets to exploit. Tho uttermost ends of the known world aro supplied generally with all they can absorb in eating, drinking, and wearing products. New things, novelties, will tind buyers even if tho buyers have to curtail their usual expenditure in butter, cheese, sugar, wool and cotton products. We experience this fact here in New Zealand. The motor car, gramophone, wireless, etc., are now having their day greatly to the detriment of trade in other (usually thought to be) essential commodities, and the great demand for these luxuries is keeping the prices high because the supply has not vet overrun the demand. This will change by and by and we shall see a slump similar to 1920 in these things. There can never be a slump in our products except it be caused by excessive production, as now, and as just over two years ago. When there is a real slump in prices caused by over-production the producers, finding very poor returns for their labours, usually slack down more than they ought to ao, and thus create a short supply which automatically jumps the price. Then they make the mistake of thinking the good time is going to continue and production is increased too far with the consequent fall again in values. I think, sir, that Mr Guy’s remedy will only tend to aggravate the disease. —I am, etc., W. ARCHER, Palmerston North, February 20, 1930.