THE COST OF LIVING.

New Zealand Herald, Volume LVI, Issue 17234, 9 August 1919, Page 1 (Supplement)

THE COST OF LIVING.

BX H. W. SEOAS, U.i,

WHEN PEACE CAME. ;

v No- n. it . # _ . . Oaring the war than ■wan often speculate on 88 to what would happen after the (J conclusion of hostilities. " There will be tr bad times," said some; " There will be a d regular boom," said others; while there t, were yet many that said " Thar© will be i- a boom for a year or bo, followed by deit preasion." There was a pretty general anticipation of & fall in prices. After the y. signing of the armistice, traders became 0 rather shy in baying; they hesitated to a hoy at war prices to have to sell at the an--1 ticipated lower peace prices. Some have a not regretted their prudence, but many a hare. We have had nine months of com- j parative peace, and, although the prices j e of many articles have fallen, those of many j 0 others are higher to-day than during any t period of the war. On the London marr ket there was for some months a general . tendency downwards specially marked' and f substantial in the case of textiles. Cers tain war demands ceased, and the demands . of peace had not had time to revive. But . these were lying in waiting. The war a loans and taxation had not mopped up all 1 the bank balances and credit. Some had I been used up, others perhaps sadly attanu--3 a tad, bat others had been actually increased by the war. It must be added to the ..account* against war, that it impoverishes the many and enriches the few. i These means of enterprise, having i awaited the opportunities afforded by j peace, largely came forth, and increased 4 demand. _' At the came time, war expenses did not fall off as many had • imagined would happen. Gigantic loans i were still required by the belligerent goi yernments. We have still to face one t in New Zealand. Paper was still issued, r Even England has increased her issue of Treasury notes by some £50,000,000 since Armistice Day. A vast military army is still maintained by the Allies in all fields, t and equally vast, armies of . unemployed at Home. Dominion troops have cot yet all reached their homes } and cif , those that have, many have not yet Bcfcited down to 1 work again. The industrial machine has i not yet resumed its former efficiency and smoothness of' working. Strikes are givins it jolts where war and revolution are not still preventing » its getting a fair . start. With a large part of the world in a state of transition from war to peace, and at the same time much if H still in a state of disturbance, it is little wonder , that prices are all of a jumble. With production still impeded and governments still spending on a war scale, it is again little wonder that on the, whole they should remain high in the early months of peace. The Hear Future. When 'we come to consider the future we at once enter the region of speculation. Weather forecasting is easy and safe compared with the forecasting of prices. Especially is this so when so much depends on the human element and on the action of governments. To what extant and at what rate will paper be withdrawn! How long, and to wliat extent will governmerits continue to support banking institutions in any such way as will enable ?. them safely to give credit to » greater extent than they normally would? Who can tell? Yet the future course of prices depends on the answers that can be given. But even if all such conditions he restored to \ the normal, : there will remain results froth the war that will prevent the general : reartoration • .pre-war... prices. . .With 1 WW; permanently injured the World has lost, the. labour of soma 10,000,000 men.''. The destruction and ..depreciation of many of the factors of - production will only gradually he made good, sad the work of restoration will divert labour from the normal requirements of production. While the progress of the world has been held wp, Its stock of gold has bw increased by an amount exceeding that for any ' equal period in the world's history, and only mailed by thai immediately preced- 1 ma the war. ] Taking finch _ factors into ' uceotnit, two . weighty pronouncements have been made. • The Ministry of Reconstruction in Great ' Britain is responsible for the statement 1 with respect" to prices, that "it is out < of the question that they should fall to i anything like the 1914 level in the near i future. With luck th« general level for ; the next decade may be only 25 to 30 per cent, higher." Professor Fisher, of 3 Yale University, U.S.A., and of world- i wide reputation on the subject of prices, < made before a conference of governors and mayors the statement : " Prices will never return to the old pre-war levels. Busi- ' ness men who are holding back, waiting < tor the old prices, are chasing a rainbow, « Business men should face the facts. To' i talk reverently of 1913-14 prices is to speak , a dead language to-day. The buyers of 1 the country since the armistice have made t an unexampled attack upon prices through J their waiting attitude and yet price re- 1 cessions have been insignificant. The reason is that we are on a new high-price level, which will be found a stubborn reality. Business men are going; to find out that the clever man is not the man who warts, but the one who finds out the new price facts, and acts accordingly." Afterwards. The ( writer takes exception to Professor Fishers " never"— is, of course, if we are still to have the gold basis, and credit is to be left to its free commer- r cial development. A sufficiently great 1 change in the gold supply can overshadow 11 all other influences in the long run. It d was bo during the period 1873-1895. An ' annual supply of gold, too meagre to satisfy t the requirements of the world for its arts „ and at the same time to bear its share in carrying on the increasing trade of the T world at the same level of prices, led to a what may be described as a debacle of ** prices. the same occur again?" s rhere is every possibility at no distant n time there is a practical certainty sooner or later. ° The average gold mine is not a long- h lived proposition. It is shallow, not b often exceeding the 1000 ft depth. The product of the poorer mine ia not crowded out of the market by that of the richer. j So they all gb through the process of exhaustion together. The revival of goldmining which the cyanide process made possible is working itself out. First one mine is abandoned, then another. The yield of Australasia has diminished to onethird of what it was some fourteen years ago. In a few years more the gold industry of Australasia may excite the same curiosity as, and perhaps be of little more practical importance than that of Wales, The product of the United States, after being very steady for some years, has fallen off by about one-third in the last two years. In the Transvaal, mines producing £7,000,000 a year are working at a loss, and cannot continue unless prices fall ; whilst others though working at a profit, are nearing the point of exhaustion.

We may safely assume that gold will ernes again become " dear," i.e., appreciate, in value, in the future. We have not yet had the last era of falling prices. When the next such era is established another set of questions will force their way to the front. The cost of living as a subject of public anxiety will have had its day. The wage earner will be more concerned with the maintenance of employment and wages. The business man will be worried about his falling profits and how he is going to readjust his business and its expenses to meet a lower scale of money values. " Bad trade" is likely to be a more noticeable phenomenon than it has been for many years. The State will feel the change. The new, and therefore debtor countries, were oppressed by the falling prices of the 1873-1896 era. The debt-ridden belligerent countries of to-day, if they have not by then shaken off the greater part of their burden, are likely to be overwhelmed. Interest bills on the present scale cannot be mat from progressively falling zmraumk