Disparity in Costs

Manawatu Times, Volume LV, Issue 6866, 24 May 1932, Page 7

Disparity in Costs

BIG ECONOMIC PROBLEM. DANGERS OF INFLATION. AUCKLAND, May 23. Present-day economic problems were dealt with by Professor H. Belshuw, of Auckland University College, in a lecture to members of the OnehungaManukau Chamber of Commerce. Professor Belshaw said the problem was to bridge the disparity between farming costs and farming selling prices, and until this was done one could not expect unemployment to be materially reduced. People in general were quite prepared to face a reduction of costs as it applied to others, but not as it applied to themselves, and it was regrettable that the community had not yet Tcally come to grips with the problem as had been done in Australia. The problem of removing the disparity between costs and selling prices by raising the latter involved an incroaso in credit for the whole world, and not for New Zealand. In fact, with regard to proposals to increase currency circulation in New Zealand to tho extent of £10,000,000, he stated that even now there was nothing to stop the hanks from increasing the note circulation from tho present' £0,000,000 to three times that amount if required, but the issue was determined by the requirements of business. A local increase in circulation by the suggested additional issue would have a tendency to raise prices in general, but it would not raise export prices, and its effect would probably be only temporary as tho issue would soon bo in the banks again. On the contrary, it would make it worse for the farmers as their costs would go up, and the increased circulation would cause more to be expended on imports. More credit in itself would be of no practical value unless it facilitated increased production at a profit. A very small inflation might do no harm, but a substantial inflation would always be difficult to control. Inflation did not remove tho root cause of the trouble.