CALAMO CURRENTE.

New Zealand Herald, Volume XXIV, Issue 8082, 24 September 1887, Page 1 (Supplement)

CALAMO CURRENTE.

J did not expect that my theory of overproduction being the cause of the universal depression would be accepted by all.. Indeed. it is so paradoxioal that the increase of wealth should be the cause of the increase of poverty that it is not strange that the mind of any man shrinks from its acceptance. ••Arundino," who promised to spike my gun, returns to the charge. He says, " Our argument is this : that, if the present yield of grain gives a margin of profit, increased production would augment the income of the grower." Now, this is absolutely true within certain limits, and subject to certain conditions. Those limits are the limits of "demand," and the conditions necessary are that the " margin of profit " should not be destroyed.

But let us follow 41 Arundmo's" illustration or argument in its natural sequence. He is speaking of the production of grain in Canterbury, and of the profit which it brings to the farmer when transmitted to England. Let us suppose for the sake of argument thuii the " margin of profit" is a shilling a bushel. .Now on what, 1 ask, is the continuance of that margin dependent? Is it not on the continuance of the high prioo of wheat in Englaud? Supposing that the price there fell by a shilling a bushel, it is manifest that there would be no profit at all for the grower of Canterbury wheat. Now what would cause such a fall of price in England ? Would it not be effected by an increase ot the growth of wheat in the Black Sea province*, in India, or in America?

Supposing that, a million tons of wheat being imported into England in one year, and for a succession of years, gave a margin of profit of a shilling, from the price ruling ; and supposing that in the next year a million and a half tons were introduced, would that margin of a shilling remain? Decidedly not. And what would have caused that fall of price? Manifestly the increase of the half-million tons. This increased production would at once cut away the profit of wheat growing to the Canterbury farmer, and wheat growing, when done without profit, would cease, and the wheat trade would be depressed in all its ramifications. If this depressed price continued, the farmer would dismiss his workmen, the storekeepers and tradesmen that supplied the workers would shut shop, and the whole community would feel the pinch of poverty. Now whatoaused all this mischief ? Simply the bountiful harvests in Russia, in India, iu America. There was an overproduction of wheat, a production beyond the "demand." My gun is not spiked yet.

Now my critio is taking only a restricted view of the matter of production. He Bays, "increased production will give added profits." He has his eye here only on Canterbury, or, say, Ne rt Zaalaud. But what would be true of a part must be true of the whole wheat fields, and possible wheat fields, of the world. And*uppo<sing that by increasing ingenuity of the age, and increased activity of the farmers all these wheat fields doubled their production, and that, by a spurt of colonisation, thrice as many acres as those now in cultivation all over the world, were made to yield wheat, does " Arandino " for one moment, suppose that such " increased productiou would give added profits?'' I scarcely think he does. In fact such a tremendous increase would cause a glut of wheat, and until the granaries of the world were emptied, there would not be a price for wheat that would pay the producer.

Now it is palpable that what is true of wheat is true of every possible production. Supposing the output of glass eyes was increased tenfold in a single year. The manufacture of glass eyes is as meritorious an industry as any we know, and the manufacturers of glass eyes are deserving of the very highest coonideratlon and encouragement. That glass eyes are manufactured at all is a self-evidencing proof that the makers of these things have it margin of profit, and " Arundino" says : "Our contention is that increased production will give added profits." Then let the manufacturers of these useful and ornamental articles of merchandise pat on a spurt, and make ten times the number of them, and it is quite clear that there will result more glass eyes than there are one-eyed men. There will accordingly be a glut in the glass eye trade ; the workmen will be dismissed ; the shopkeepers who supplied them with groceries will fail, and there will be general depression in the business of glass eyes. And It was over-prodaction that did it.

Or take the manufacture of wooden legs. There it not a more commendable industry in existence. The makers of wooden legs are the benefactors of their species, and just aa the man is a benefactor who makes two blades of grass grow where only one grew before, the man that makes two wooden legs where there was only one before, deserves well of his country. But in our degiro to benefit this deserving class, let us urge them all to put on a spurt, and in the interests and for the welfare of the human <j'ace; mike twenty times as many wooden legs as they used to do. It is manifest that witbin a measurable distance of time there will bo more wooden legs than there are legless men. And what will follow ? " Arnndino" says that "increased production will give added profits." I say, 00 the contrary, that unless a general war occurs there will be a surplusage of wooden legs; there will be a fall in price, and a general stagnation in the wooden leg department of trade. lam quite aware that, with 1% rattling good war, and with the present excellent arms of precision, the demand for wooden legs might be greatly increased ; but it would be rather straining things to my that it was the absence of a general war that was the oause of the depression in tho wooden-leg trade ; and yet this is. what they say when people assert that it is want of increased consumers that is to blame for the

depression of trade. And it would be equally absurd to attribute the fall in wooden legs to the appreciation of gold ; for if the purchasing power of gold was decreased 50 per cent., it would not under snob circumstances afoot in the smallest degree the trade in wooden tags; neither would it be affeated if silver, copper, tin, lead, and all the metals in the mines were made, as well as gold, standards of value in the currency ; nor oan 1 oonoeive of any circumstances under which a man would purchase and strap on wooden legs, if he had a couple of hini legs of his own available for all practical purposes. Ho soon as wooden legs reached the limit of " demand," any over production of them would certainly lead to depression in the wooden- market.

.Now, I have selected glass eyes and wooden legs as illustrations merely because we can conceive of their limit of " demand bat it is quite certain that there must lie also Ik limit beyond which the production of any article on earth would be overproduction. If we produce ten time? as many boot*,, or ipeotacles, or hate, or watohes, or calioo, or tomahawks, or timber, or razors, or blankets, or gum, or wool, or potatoes, as the world's market can absorb, that is overproduction ; and it produces depression in those several industries ; and the more we produce of them still, the depression will be all the greater: and if in a wild craze for production we have been doing this with nearly every produot of human industry, it inevitably follows that there will be depres«ion in them all. It is all very well to say that there are millions of people who still want boots and potatoes and the rest. True; but that kind of " want does not benefit trade in any way; and unless they can pay the bawbee for their wants they don't lift the depression. And though it .seems quite true tbivt enabling them in some way to become purchasing customers would cure the depression, it is preposterous to say that then- inability to purchase has bean the cause of the depression. The cause has been srer-produotion.

I have never yet pretended to say what would remove the depression. " ArundinO says more production would do it. I say it would make it worse. For if *11 these people were set : to make more toots, more watches, more hats, and to grow more wool and more potatoes, or to make more glass eyes and wooden —it would only make a bigger glut In the market in those several commodities, and on, my showing the depression would be all the greater. The fact of the matter 's, as anyone With two eyes in his head might see, that

the wild craze that baa possessed the whole world for the past fifty years, driving everybody, as If he was possessed of the devil, to become a " producer," has had its natural sequel in there being much of everything for the world's market, and universal glut has produced universal stagnation. I have told what lam sure is the cause. Let "Arundiuo" or others evolve the remedy. 1 hare not attempted it, unless in one department of trade; and I am sure that neither increased production, nor a depreciation of gold, nor a bimetallic currency, nor anything else but a rattling war, would relieve the depression in wooden legs. Poll ex.