THE ECONOMIC POSITION.

Northern Advocate, 4 August 1932, Page 3

THE ECONOMIC POSITION.

To the Editor,

Sir. —There is one point I would like to make quite clear to Mr A. IT. Long and all who read my previous letter; that is, that I have every -(sympathy for the genuine New Zealand farmer, not only sympathy but admiration, particularly so the North of Auckland farmer. Had it not been for hard work and the increased production, this country would indeed be in a bad position. •I would also like to make it quite clear that I did not intend my remark “working a little harder” to apply to the farmer, his wife or children. Thoj 7 are the hardest working section of the community, and deserve our admiration and all possible assistance. Mr Long says that inflation was a necessity forced on the people by the Great War. It would be more truthful to say that inflation was caused by the foolishness of those responsible for the management of the Dominion’s affairs during the war. What happened was that, during the war period, farmers -became land speculators. The value of land was inflated to such an extent that it became impossible (at anything like competitive prices) for cows to produce enough butter-fat to pay the cost of production plus the interest bill on the inflated value of the land. It is common knowledge that farm lands —without one penny being spent on them by way 'of improvements —advanced from £2O to as high as £BO per acre; that, in quite a number of cases, there were first, second, third, fourth, and even fifth mortgages; that land was sold at £BO per acre —£10 down and £7O on mortgage, the rates of interest agreed upon being from 7 per cent to 10 per cent. This is just another example of inflation. The same thing (not, however, to the same extent) took place jn wages in connection with our industrial enterprises. Wages were inflated and output deflated, with the result that the cost of production and living increased. From the way some people talk about the banks one would think that the banks gathered in all the money they could and stored it in their vaults, that they had something in the nature of a hidden gold mine or an inexhaustible supply of money in the vaults; that the banks (I am referring to New Zealand) were owned and controlled by a few super-wealthy individuals, whereas exactly the opposite is much nearer the truth. By far the largest number of shares in the Now Zealand banks are held by, comparatively speaking, poor people. In no country in the world have the banks done more to assist the building up of the country, or more to promote the prosperity, than they have in this Dominion. Credit in many eases beyond a safe margin was given to farmers and industrial organisations. Not only was credit given to individual farmers, but also to land investment companies, stock and station agents. Unfortunately, as I have already pointed out, instead of this money being used to open up now land, like enormous sums -of Government money it was used to inflate the value of land already too high in price. If any criticism of our bankers is deserved, it is that they were over-generous in their assistance, ami failed to stipulate to what purpose the money or credit given, was to bo put. Today, neither the bankers nor others who have money for investment, favour farm, or, for that matter, city mortgages. The reason for this is Government interference —the Moratorium. It is perfectly true that in every quarter of the globe men are searching for gold. I do not, however, agree that if a large deposit was discovered there would be an inflation of currency. If a large deposit was found gold would decrease in value. Butter is our best saleable commodity today. It will, however, speedily bocome the same as wool and a number of other commodities if anything in the nature of short-cut methods to prosperity are adopted, such as what may be termed an unnatural exchange rate or an internal currency. AVo depend almost entirely on the Home market for the consumption of our butter, cheese and wool. The consumption by the Home market depends on the purchasing power of the mass of the population. This depends on the prosperity of industrial England. If it is impossible for Great Britain to find a market for her manufactured goods, industrial England cannot bo prosperous. Butter consumption must decline. We arc also subject to world-wide competition for every lino of produce, likewise the competition of the British far-

mer, who today is demanding protection. There is more wool and butter produced in the British Isles (including Ireland) than in this Dominion. If our land is inflated beyond the capacity of the British consumer ,to pay for its produce, it is the fault of the land speculator, not the consumer. Mr Long says that the present trouble was brought about by the producers, not the consumers. I say it was not: that the producers are the consumers, the consumers the producers, i.e., the producers of farm implements, barb wire, galvanised iron, etc., in Great Britain are consumers of the producers of butter, wool, etc., in New Zealand. It was, in my opinion, the speculators who

caused the trouble. The speculators are the farmers who, instead of farming,'sold their lands at a profit to others who did likewise; the merchants who sold their shares ami buildings at a profit instead of using them for the purpose for which they wore brought, into existence.

I claim that a much bettor plan than attempting to live up to a standard of utter extravagance would be to live down to a standard that would ensure consumption at least meeting production. This does not mean a reduction in the standard if necessities,' of food, clothing, or homes, but a reduction in free Government service and luxuries, remembering that what is a luxury to the city dweller is not a luxury to the country farmer, by which I mean such articles as gramophones and wireless sets. These, in my opinion, are not luxuries to the farmer; he is justly entitled to home amusement, home education. Wireless certainly provides that fdr the farmer.

The land policy I would like to see would be not deflation, not to rob the farmer of his possessions, but one of stabilisation. I would like to see dairy land reduced in value to £3O per acre for cow to the acre land; reducing in value according to its productive capacity. I would relieve the farmer of all land tax and rates, and charge a flat tax on the minimum quantity of but-ter-fat produced per cow' per acre. Reduce this for extra production, pay him a bonus for increasing the productive value of the land, i.e., one cow to throe acres to one cow to two acres, up to a cow per acre. It would be a sound, and, in the long run, an economical policy to clear all mortgages off the productive land, and, by gradually reducing its capital valup to £3O per aero for cow to the acre land, prevent land speculation. If a farmer wished to retire from farming or change his location, lie could buy and sell at £3O per acre. This would stabilise the value of our farm land as regards dairying.

I would carry out the same policy with all classes of farm land. AVe would then be in a position to compete with the world. Farming would be the most profitable occupation in the Dominion, and be in a much better position to provide profitable secondary industries. It is quite true it would probably reduce the size of our cities; that, however, would not matter. Farming should be the most profitable occupation in the Diminion. I would, of course, control the areas free of taxes allowable to one man. lam absolutely convinced that the one and only way to make this, what wo frequently call it, “God’s Own Country,” is to follow His instruction: “Till the land.”

I must plead guilty to being an Englishman (Lancaster). Perhaps lam prejudiced. Here in New Zealand we arc looking with anxious hopeful minds towards Ottawa; others arc doing the same. Thousands, I would be safe in saying millions, of my countrymen are doing so, men who have paid the highest taxes in the world for years to help build and retain the Empire; men and women who, in saving from thelow wages (in spite of doles and unemployment) have handed to the Government in saving bonds and certificates during the past ten years over a billion of money, men and women, millions of them, who are cheerfully facing the conversion of the huge sum i comprising their savings. What are they looking for? AVhat are their representatives going to say, to ask, at Ottawa? AVhat are they going to offer? They will offer us —I say us, because today I am one of you —moderate protection, even on our foodstuff, against the foreigner. No protection will ho asked for the Britisl) farmer. In return ho will say: “I buy your wool, pay freight homo, manufacture it, using 100 per cent. British labour. I pay freight out to New Zealand. All I ask is that you admit your own wool that I have manufactured into goods duty free. Do this for us, and millions of us will cat you? butter, and grow fat. AA’e will take your casein, yes, even the bones of your cattle and make them into combs and collar studs, etc., if you will admit them free of duty.” “Do unto others, ‘God’s own Country.’ ” A'ou would have your fellow citizens at Home admit your butter, wool, etc., free, and charge others a duty. “Do likewise unto them.” They ask even less than this: free entry for 100 per cent. British labour on raw material bought from you. Personally, I. am of Hie opinion that a duty free Empire is the soundest policy of all. That is no duty between Empire units. I can sec no more justification for a tariff against Lancaster in Auckland than against 'Christchurch. AVe arc all British; it is only a case of distance. 1 will admit that to abolish duties overnight is not possible, or desirable, but to reduce them to a maximum of 25 per cent, is, and then at the rate of 1 per cent, per year for 25 years. The industry that cannot compete against an Empire industry with 25 per cent, for the first year, 24 per cent, for the second, and so on, is better never started, or, if started, extinguished. I am, etc.,

A. J. HUTCHINSON,