THE COMPENSATING PRICE

Nelson Evening Mail, Volume LXXII, 16 July 1938, Page 10

THE COMPENSATING PRICE

PRINCIPLE, NOT PLAN FARMERS’ UNION VIEWPOINT STATEMENT BY PRESIDENT The compensating price is a principle, not a plan, said the Dominion president of the New Zealand Farmers’ Union, Mr W. W. Mulholland, when shown yesterday the report of a recent address to the Nelson branch of the union by Colonel S. J. E. Closey. The report stated that the branch “endorsed the compensated price plan as outlined by Colonel Closey.” Mr Mulholland said he could not find in the report of Colonel Closey’s address anything to justify the use of the word “plan” rather than “principle.” The speaker had stated the cause of injury, namely, that the New Zealand farmer was selling his goods overseas at the lowest world price level, but was buying his requirements in New Zealand on a high, protected price level. He had said that the gap must be closed, and with this principle the New Zealand Farmers’ Union was in perfect agreement.

The address had offered four ways in which the gap might be closed, said Mr Mulholland—reduction of tariffs; reduction of taxation, reduction of wages, increasing the farmer’s reward. The attitude of the New Zealand Farmers' Union was to leave it to the Government of the day to decide how the gap should be closed. The general principle was clear, and the union contented itself with stating it. Its application in the light of the particular conditions operating at any time was a matter for the Government of that time. Those conditions might be as Colonel Closey had outlined them—wages, fixation, tariffs, low prices. The union, as a Dominion body at any rate, was not going to decide that, nor would it attempt to decide the particular action to be taken under the compensating price principle.

STATUS OF COMMITTEE It was pointed out by Mr Mulholland that there was no official connection be--tween the New Zealand Farmers Union and the Compensating Price Committee. The latter was simply a body of men who had interested themselves in lira principle, and Colonel Closey appeared t«* be doing good work in spreading the knowledge of it. V/hat the New Zealand Farmers’ Union had done was virtually to give the committee’s activities its blessing and to request its branches to lend all facilities for the holding cf meetings, and so on. All the union insisted upon was that the committee should keep within the general bounds of the policy 6f the New Zealand Farmers’ Union. Another thing to be remembered was that branches could decide independently to support anything they liked. Then if they wished the Dominion body to give its official support they could go about it in the usual way, by submitting remits to the annual conference.

OFFICIAL VIEWPOINT Returning to the viewpoint of the New Zealand Farmers’ Uftion upon the compensating price, Mr Mulholland said the union had not departed from its traditional attitude, as indicated bv the first clause in the “compensated price” plank in the union’s platform, that while the Farmers’ Union policy is still that the soundest method of closing the gap between farmers’ costs and prices is by a reduction of costs, we insist on its complete closing by a reduction of costs, or by an increase in prices.” After these words there followed a statement to the effect that if the Government would not proceed with this reduction of costs, then its policy must be such as would ensure the farmer a price which would compensate him for any disability he suffered from costs fixed at a level out of relation to that on which he otherwire would be paid for his produce. Again, it was clearly stated at the end of this plank in the platform that compensating prices were not to be brought about by inflation, or an increase in the general price level through an increase in the amount of money put into circulation. “This precludes all ideas of having the compensating price financed by a credit issue or any device of this nature,” said Mr Mulholland. “The farmers are not anxious to have their economy divorced from that of the rest of the community, nor do they seek a form of assistance which would do the country no good in the long run. To those who say that an inflated price level is the way to assist the farmer, the union is unsympathetic. It holds that reduction of costs is the way, because it will solve the farmer’s problems and at the same time benefit the country as a whole.” ATTITUDE SUMMED UP “Summed up, therefore, the union’s attitude is as follows: (1) The policy of reducing costs is the soundest way in which the economy of New Zealand can be kept stable, and by which the farmer can be enabled to carry on his business properly.

(2) If the Government is not prepared to keep costs and prices in proper relationship by reducing costs the farmer should receive a price compensated in such a way as will adjust the relationship. (3) The compensating price is not to be brought about by a credit issue, or by any means which will have the effect of inflating prices; and

(4) The Farmers’ Union puts* forward no plan by which this end is to be achieved but leaves that to the Government, subject to the qualifications expressed above.”