FALL IN PRICES

Nelson Evening Mail, Volume LXVI, 18 September 1933, Page 7

FALL IN PRICES

RESULT OF THE IMPACT SIGNS OF RECOVERY MR COATES HOPEFUL Evidence of the rising level of the economic barometer was given by the Acting Prime Minister (the lit. Hon. J. G. Coates) in the course of a speech to the Wellington Commercial Travellers’ and W arehousemen’s Association (reports “The Post”). Mr Coates said that although people reasised the effect that the prices of New Zealand’s primary products had on the economic welfare of the country, they did not all realise its implications. The fall in prices had been catastrophic. In four years the drop bad been greater than anyone could have imagined. In the last serious depression it had taken twynty years lor prices to reach rock bottom, and in the slump previous to that the decline had been spread over thirty years. The Government Statistician’s figures showed that, while the farmer’s costs were 25 per cent, higher than in 1914, the index figure for export prices of butter, cheese, meat and wool was 29 per cent, lower. This summarised the position of the primary producer, and was an explanation of most of the Dominion’s economic difficulties. Forty per cent, of the total production of New Zealand was exported, and naturally tho internal price? coincided with the prices realised overseas. The New Zealand producer, through price changes since 1928, had lost in Ins exports during the last four years the huge sum of £67,200,000. This had inevitable repercussions on the value of total production and the national income of the Dominion. Over the period since 1929 there bad been a fall in production of £125,000,000. This corresponded to a fall in the national 'income of £150,000,000. The main object of the Government bad been to bring prices more into line with costs, not only on the farm, but also in the factory, if the expenditure of the Government had bene maintained on the same scale as in 1929 the additional amount that New Zealand would have been called upon to meet in taxation would have been more than £17,000,000. The Government had been called upon to carry out many unpleasant tasks. It had had to cut interest rates and reduce wages and other social amenities which constituted part of tiic overhead of the State, and the salutary effect of this policy was still being felt. “HORRIBLE QUESTION” ‘‘We now come to the horrible question of the depreciation of the currency,” said Mr Coates, who added that' the Government, after analysing the position, had been convinced that it was the only course to save the essential primary-producing industries. Then there was the sales tax, which had been levied with great reluctance. However, in spite of the raising of the exchange rate and the imposition of the sales tax, the cost of living had ■ fallen. The retail prices had been higher in the month preceding the increase in the exchange than they had been in any month sinco then. Thus the prophets had been entirely wrong. Mr Coates said that lie was grati- , fled at the numerous signs of improve- ; ment in the business outlook. Tho , Stock Exchange index, based on the ( prices of tho shares pf 49 important . companies, had increased 18 per cent, i since January, and was now 27 per ‘ cent, above the lowest level recorded in - April, 1932. The prices for dairy produce were most heartening and illuminating. Since April butter had risen from 65s per cwt to 100 s, while the price of cheese had jumped from 37s to 535. Mutton and lamb were also bringing better prices. The chairman of the Meat Board bad intimated in a cable last week that mutton might ] fetch up to 8d per lb. This meant that ( the farmer would receive about 17s for a decent wether, instead of 4s or ss. t The wool trade has definitely improved, j and prices at Home bad risen 25 per cent. • A voice: “Is that the exchange rate?” s Mr Coates: “No, the rise is apart from' that altogether. That is another 1 25 per cent.” The London quotations i for base metals had shown an increase 1 in the current year, and here again ( was a reliable barometer of economic affairs. In New Zealand the motor registrations for August bad exceeded , those for August of last year. This ) was the first time for two years that ■ an increase had been recorded. Motor importations had also increased. The Tourist Department had reported that for July and August there had been an increase of 15 per cent, in the bookings as compared with the corresponding months of 1932. There was definitely a better outlook all round.