The Northern Advocate Daily “Northland First.” WEDNESDAY, DECEMBER 29, 1937. STATE CONTROL IN NEW ZEALAND

Northern Advocate, 29 December 1937, Page 4

The Northern Advocate Daily “Northland First.”

WEDNESDAY, DECEMBER 29, 1937. STATE CONTROL IN NEW ZEALAND

Registered for transmission through the post as a Newspaper.

The history of the subjection of industry and trade to some measure of State control in New Zealand makes interesting reading. It was in the days of Seddon that a policy of State regulation was initiated by means of a series of labour laws. In 1919, under the influence of the Great War, there was passed a Board of Trade Act, which empowered tile 1 Government to “make regulations for the prevention or suppression of unfair competition and of monopolies and unfair combinations, for fixing prices, and for the regulation and control of industries in any manner deemed to be necessary.” In 1922 a Wheat Export Control Act was passed, and in 1934 there was placed on the Statute Book the Agricultural (Emergency Powers) Act, which gave to the Executive Commission of Agriculture wide powers over the control of the dairy industry. This legislation was superseded in 1936 by the Primary Products Marketing Act, which, with its amendment passed this year, makes full provision for the control of all primary foodstuffs and for guaranteed prices for those products. The year 1936 saw another important step forward on the road to State control, in the. shape of an Industrial Efficiency Act, which gave the Gov-

eminent practically complete control over internal industry and trade. It established a bureau of industry empowered to inquire into proposals for the promotion of new industries, to regulate existing industries, to fix prices by regulation for any goods or services, to control production, distribution and marketing and to fix quotas if deemed necessary. Any industry, operation or trade of any kind may be required to be licensed and carried on only under license, if it is proclaimed by Order-in-Coun-cil that such enterprise shall be carried on under license. Since its establishment, andlurp to March 31, 1937, fifteen industries have been licensed. The method followed is generally to investigate the conditions of the industry concerned, including both production and marketing, and, on the basis of this investigation, to license producers and to fix prices, conditions of sale, etc. The expressed intention of the Government is to stabilise industry and provide security and fair conditions for all those concerned in it —employers, workers, dealers and consumers. A bulletin prepared by the Canterbury Chamber of Commerce in consultation with the Faculty of Economics, Canterbury University College, in the course of an analysis of the Bureau of Industry, admits that the ideal aimed at seems in many respects a desirable one, for it is true that both industry and trade, in varying degrees, are insecure, unstable- and wastefully conducted, but this instability, insecurity and redundant capacity constitute in some measure the price that must be paid for the freedom and flexibility necessary to meet the ever-changing needs of the. community and to ensure that progress is maintained. Desirable though the ideal of the Government may be, it is contended that its attainment, or even its near approach, is beset with difficulties and dangers, which, when investigated, suggest thgt the remedies proposed to be applied may be worse than the disease it''is intended to cure. The standard of living will, it is argued, be highest when the consumer is free to select for himself, what he wants from a wide range of goods and services offered on the market when producers and traders are striving so to organise production and marketing as to meet the changing needs of the consumers with the quantities, qualities and prices that will suit consumers best, and which will ensure both maximum production and consumption.

State fixation of prices fails to rescognise that the fundamental function of a price is to equate supply and demand. If the price is too high the supply will not be taken from the market, and either the price or the supply must be reduced. If the price is too low, the supply will not be forthcoming to meet the demand, and either the price must rise to stimulate further supply or part of the demand must go unsatisfied. That price is right which will clear the greatest quantities and the right qualities of the goods. The right prices, the right quantities, and the right qualities can be found only by a process of trial and error in a market where producers, dealers and traders are alike free to buy and sell a?, they please. ... It is noticeable, too, that in several cases where regulation has been applied and prices fixed, as in the case of petrol, wheat and fertilisers, the fixed price has been higher than that previously ruling. Where Governments fix prices, producers are usually able to persuade the price-fixing authorities that fair and reasonable prices are higher than the levels which ruled under competition. The consumers have to pay the difference, and, where the market is secured by the monopolistic license, the stimulus which competition gives to efficiency and lower prices is eventually removed.

The arguments adduced in the Chamber of Commerce circular are weighty. New Zealand has already departed in several respects from the tradition and practice under which Britain became the greatest industrial and trading nation in the world, and the people should watch very carefully the developments that are taking place.