PROBLEMS OF THE DAY

Nelson Evening Mail, Volume LXX, 3 October 1936, Page 4

PROBLEMS OF THE DAY

(To The Editor) Sir, —In reply to friend “Ikona Mali,” he has had some difficulty I hear in following my last letter, and is still in the dark as to my meaning. I might say I have the same trouble with his. What exactly is his cure-all I can’t exactly find out. I think my opportunities of rescuing him as a brand from the burning at this late hour are small indeed. He has had so many opportunities to see the light, and is all unheeding, so he is given this last chance. However, wc would not be alive if wc all thought the same, and while there’s honest doubt there will be progress. I have to rely on memory as to what he actually wishes to know. After reading his letter through my wife used it to kindle a fire, and the words of a budding prophet rose to high heaven, and would not return, but their meaning lingers with me still. Somehow or other they seem strangely familiar. The main contention was that there are a lot of people about Nelson with a potentially consumptive power that has not been satisfied. That also is the main theme of all truly devout Douglasites. That, brother, is quite Irue! It is perhaps fortunate for some and the reverse for others. I quite realise there are heaps of people in Nelson perhaps, even in our little valley here, that would be willing to buy everything and almost anything under the sun if they had the necessary money. I must grant that much. I can’t stick there. Still, there is another side of the picture. What arc those self-same people going to give in exchange? The idea in New Zealand at the present moment with the 40-hour week is to give less and get more and then growl because the cost of living rises. No one that I have heard of is going to supply those extra potential goods to those people because those self-same people have already bartered the products of their labour and have nothing more to offer.

I hear that still small voice crying in a wilderness of correspondence: “We have solved the problem of production and distribution, but we haven’t solved the problem of exchange. There is a shortage of buying power; more money is the solution.” Before we arrive at the money juggling business it might be as well to examine the first plank in the Douglas creed. “We have solved the problem of production; do not worry about to-morrow, machinery will take care of that. Why, one machine ran do the work of thousands of men.” A certain amount of truth, no doubt, as far as New Zealand is concerned, a large part Bunkum. In an analysis of the productive methods in a country like New Zealand we have to consider first the machine-made factory products ana primary products, secondly the methods by which they are distributed.

We are essentially a farming country and the prices received to-day are, I suppose, on an average sufficient to pay wages of management, labour and capital. It is generally conceded that any increase in production in that industry could only be accomplished at an increased cost. The -aw of diminishing return is applicable to all farming lands in all countries; that an increase in production in New Zealand could only take place at an increased cost, and that law has very definitely set in in this country. We cannot produce endless quantities of cheap produce, butter, meat, wool, etc. The production entails a large expenditure of energy and capital; any increase must entail greater per unit cost.

When we enquire into the cost of machine-made articles we find that our farm machinery actually costs more than it did before the war; our local costs of production are exorbitant; that our small and potentially small market offers no hope of our being eventually supplied with abundance of cheap goods in this direction. Being a primary producing country, any increase in secondary industries, in many cases would be at the expense of the primary. Whether we go to our tailor to buy a suit, or to our grocer to buy a pound of butter, the position to-day is not very much different from what it was 20 years ago. Each article has been produced by the hard sweat of someone’s brow, and I fail to see how we in New Zealand to-day have in any way solved the problem of plenty for everyone. The stark truth is that someone must still go short and 1 toil be our lot.

As regards distribution’, we certainly are better served than we were 20 years ago. Still, we pay dearly for that luxury. The day when endlessly cheap transport within the reach of all and sundry is a long sea mile off. Lastly Exchange, the development of our modern money system. Well, I think we are learning to-day in New Zealand that any increase in the money without increased work, only results in higher costs and we shall know more about higher costs before next election.

“Ikona Mali” would like my views on inflation and my meaning of watered Reserve Bank notes, and quotes the watering done by former Governments. The past Governments during the war period found the watering of the New Zealand pound an easy way of settling their debts for the time being. In fairness we will have to admit that necessity drove them on. They were then faced with the option of leaving the money permanently inflated at the ridiculous post-war boom level, when suits cost £ls. It would have necessitated a high exchange or giving that part of the community whose contracts were fixed on a lower scale a chance to live, and they chose the latter. Whichever path they went at that time meant ruin for many. The Forbes-Coates Government increased the exchange to 25 per cent. As prices rose very little during that period it could hardly be described as inflation as we understand that word. The reason was they lowered wages and importers also sold at a much smaller margin of profit—probably one of the few instances of deliberate inflation with good results. If that Government had drawn heavily on its London funds as it was entitled to do for public works it would have been in office to-day. On the other hand, the increased cost and shortage of labour that policy would have created would undoubtedly have nipped in the bud the enormous increase in the production of dairy produce that was brought about by that period of relatively cheap labour and the 25 per cent. The irony of the position is that the Government that accumulated those funds and increased the only form of wealth in New Zealand that can truly be said to be economic, has had to vacate its position to a party who will be able to squander those London reserves on unproductive Government works and the con-

sequent army of unproductive people in New Zealand. —I am, etc., A. PRODUCER. Motueka, 30th Sept.