NATIONAL ECONOMY

Nelson Evening Mail, Volume LXIV, 21 February 1931, Page 4

NATIONAL ECONOMY

COMMENT ON MR HOLLAND’S ATTITUDE (Contributed by the Now Zealand Welfare League) Mr Holland in his criticism of the Prime Minister’s statement touches on the effect of wages on primary produce and in doing so conveys in the same old misrepresentation that the farmer is not much handicapped by wages because he does not employ many hands, We give Mr Holland credit for including butter factory and freezing works labour, part of the costs on primary produce, because even this is not conceded by some of his followers who confine the burden to farm paid labour only.

As a matter of fact primary produce is affected by almost- every industrial wage—railway workers, waterside, seamen, manufacturers of all kinds, carpenters and so on, for the costs in all these occupations and keep up the high cost of getting our primary produce to the market. To take out the actual figures would be difficult but it would show an enormously greater burden than is admitted by Mr Holland, who says a 10 per cent, wage reduction would be of “infinitesimal benefit” to the farmer —of course on his showing it may be infinitesimal because he only includes three items out of a much larger number. If he had omitted one of these, and he might just as fairly done so as omitting others, the relief could have been proved to be almost “nil.”

One of the chief causes of high costs is however, not the rate of wages paid, so much as the smaller amount of work done. If official labour would permit more payments by results and relax some of their restrictive methods the earnings would be greater and the cost of production less. / There is another point on which Mr Holland is unsound, and that is in his caustic criticism of Mr Forbes’ call for reduction of interest. We have seen many “Labour” criticisms on interest, including Mr Holland’s own pronouncement “that interest is something for nothing.” Quite recently Mr W. Nash, M.P., and others have strongly criticised Mr Downie Stewart’s policy of reducing the limit for deposits in the Savings Bank, hut these members do not appear to realise, any more than does the Government itself, that so long as the Savings Bank and Treasury offer such high rates of interest for money, so long will it ho impossible to realise a general reduction in the rate. The most practical method of lowering the rate of interest is for the Government to at once stop all unproductive work.

This expenditure is so heavy that it is absorbing all or nearly all the money available for investment, leaving so little for the purposes of productive expansion and development tliat a high rate of interest has to be offered by private enterprise to attract investors. There is no fear that money will leave the country as the world’s rate of interest is if anything lower than ours.

However this may he, a little enquiry by Mr Holland would show him that there is no tendency for the lender to exploit the borrower, for private institutions are meeting their debtors with far greater concessions than is realised. Tt would he interesting to know whether the State lending departments are showing the same consideration for borrowers.