SUPPLY AND DEMAND.

Northern Advocate, 15 August 1935, Page 9

SUPPLY AND DEMAND.

(To the Editor.) Sir,—ln your issue of August 3 Mr Tremaine is reported to have stated at a meeting of the Herd Testing Association that “supply and demand has ever operated in the past, and will continue to do so.” I would submit this is the exception, not the rule. Most commercial enterprises are, of recent years, well organised to protect their interests, and continue for price fixation, many of them to the extent of exploitation. Instance the recent wire cable transaction with a harbour board, where it is plainly evidenced that advantage was being taken of the “trade within the Empire” slogan. The rate of interest is-fixed, and incidentally the Whangarei Dairy Company “fixed” suppliers’ interest on capital at 2J per cent. Fertilisers, wheat, separators and nearly all commodities that a farmer requires are under a fixed price. The separators, one would think must be subject to profiteering. The price of tin was put up to a fabulous price,* with Governments negotiating to bring about the desired results. Further afield, England is adopting various methods to “fix” a payable price for her farmers—uneconomic production. The latest in the suggestion of price fixation is the Transport Board, with fares on licensed motor services. I could go on indefinitely, but sufficient is already stated to discredit Mr Tremaine’s contention of “supply and demand.” Even when so called co-operative concerns are operating, can we escape the effects of these organisations, their influences being so strong that they are enabled to work their will upon many institutions? However, Mr Tremaine at the same meeting immediately abandoned his principles when he said he would “fix the price of gold, not on the old basis,” but “on present price levels.” “On present price levels” would compel the exchange of 180 lb. of butter for an ounce of gold, whereas on the “old basis” 80 lb. of butter would suffice. That Mr Tremaine would fix the price of hoarded gold and refuse to entertain the idea of a farmer having a fixed price is somewhat distressing, considering the important position he holds. Replying to a question on this subject and monetary reform, at a meeting of suppliers at Tauraroa, Mr Tremaine said “he hoped to see the day that a £ would have the same value throughout the Empire.” 1 think, on reflection, Mr Tremaine will agree that a £ is worth to its possessor what it will buy in its country of origin—it never circulates elsewhere. Therefore a £ in England might be twice the value of the £ in New Zealand. In language only are they the same, and never likely to be otherwise, as conditions governing values in the respective countries will never coincide. Regarding a price fixation for farmers’ produce, or exports, which appears to be the mysterious topic with many, although with various advocates the method in details might differ somewhat, the basic principles involved are the same, viz., that local currency be based on the volume of exports, valued at the average cost of production, instead of, as now, on London balances. If our products realise low prices cn the world’s market, less goods will come back in return, but the volume of currency distributed internally would not be affected. This does not infer that exchange would be risen, or even kept at its present pegged rate. One thing only should affect exchange, and that is trade balances. The scheme has no designs in banking or financial institutions. It concerns everyone, and if more enlightenment is needed people should attend some of the meetings where are given very able addresses on the subject of monetary reform, and read, mark, and inwardly digest the reports of the London and Southampton Chambers of Commerce’s special committee. which condemns the present money system. Notwithstanding that, Sir Alfred Ransom declares the scheme “nonsense.” The future of our standard of living and our civilisation as we know it today depends entirely on this. I am. etc.. E, WOOLHOUSE.