A PROSPEROUS YEAR.

New Zealand Herald, Volume LXIII, Issue 19215, 2 January 1926, Page 11

A PROSPEROUS YEAR.

OUTLOOK FOR THE FUTURE. REASONS FOR CAUTION. EXPORT RETURNS UNCERTAIN. SMALL MARGIN OF SAFETY. A year of prosperity, but doubts ahead—that appears to be tho average summing up of the economic situation as the new year dawns. New Zealand has been a great producer but also a great spender, and should the pessimistic review of prospects for exported produce prove accurate, then there is not a shadow of doubt that the country in 1926 will have to "ca' <:anny.", If, on the other hand, tho market, particularly for butter, should improve, and there are many who believe that the present weakness is 'only a passing phase, then things will be well. Tho country will be able to coutinue its habit of living at the highest average standard in the world and buy abroad at what would have been considered a fabulous rate. , And here it might be remarked that no serious privation would be suffered in a general sense if it became necessary during tho new year to "shorten sail." Actually we do not quite realise how very well off we are. Not only has there been no unemployment during tha year;, but a prosperity and a progress that has been reflected in high wages for the majority of those who are most likely to be affected first by a "tightness" of money. A sure indication of the conditiou of general finance is found in the amount of building. During the year a number of costly buildings have been completed in the city, and although the needs of business appear to have been satisfied for tho time being, the building of houses goes on apaco in all suburbs There is money available for homes, and that in itself is a fairly reliable sign, seeing; that the majority of homes are not built without tho aid of the lender. The Farming Community. The farming community has prospered. During last producing season prices were high, wool in particular being profitable. The number of farm bankruptcies has been high in comparison with other industries, bui this is directly attributable to the boom and tho slump of 1020-1921. The continuance of the moratorium enabled many men to continue to hold farms bought at absurdly high prices, and pile np annual losses far longer than should have been tho case. The inevitable is steadily being realised. The men who are on land at prices which cannot bo profitable are being weeded cut and, painful though this may be to the individual, the country as a whole is benefiting. To-day tho fanning community is more stable and permanent than for some years. Its backbone compirses those men—and they are numbered by the thousand—who refused to sell when prices appeared to be so attractive. Many of them wer« substantial in the economic sense when things were at their worst and even though tho outlook for produce may not be particularly bright they are in a position to stand a siege.

The city community is very liable to forget what it oves to the old-established farmer who all through the boom and the slump and its aftermath, has worked upon a low average standard of prices. He is the backbone of the rural community just as city firms which followed a conservative policy are the backbone of city finance. The Export Margin. It is because the country has been so prosperous that the margin of imports over exports remains at a low figure. The imports of the year, as for many years, have been swelled by motor-car 3, motorlorries, motor accessories and motor spirit. Certainly a considerable part of the business in motors has no snggestion of luxury about it. "Motor transport has taken the place of Glower means of road transit, and to an extent that few people imagine the motor is helping the country to do its work. Nevertheless, the increase in motor-ownership implies a good deal of luxury and some extravagance. _ The motor sometimes is run out of a limited income, find hence other trade suffers. The only point to be remarked is that less employment is provided by the man with n motor, who runs it at the expense of the home, home comforts, and clothing than by the man in a similar financial position who lives well without a car. However, nothing will stop the cult of the motor, and from the national point of view the principal object is to reduce the volume of the motor trade with foreign countries and to increase the volume of that trade with Britain. Britain is the country's best customer, and it is all to >-he good to buy the bulk of our needs from Britain. The new year promises to see an extension of trade with Britain. Dairying' Prospects. The current dairy season is establishing no new records in production, and this fact, combined with the possibility of lowor average prices, is another argument for cat cion. Owing to the wetness of tho spring, the lateness of the flush period and the possibility of dry weather limiting output next month, a good deal less money may be distributed by the dairy companies this season than last, and if that should be the case every trader in the province will feel its effect. Hence the importance of caution in importing. Apart altogether from production traders have felt the effect of the present craze to buy cars, sections of land, pianos, gramophones, furniture, and many other things upon the instalment plan. Sometimes this kind of buying is an aid to saving, but generally speaking it. i ; not a wise thing for "a person on wages or salary to mortgage it except upon essentials such as a house. The system tends toward extravagance, and it would be an excellent corrective if traders treated cash buyers a little more generously. The cash buyer is the best class of buyer, but often he is treated no better than the person who runs an account. Hi- would be a bold man who would predict tho economic possibilities of the next .six months, and the watchword should be caution. There is no cause for panic—panic, indeed, would precipitate trouble—but there is a long gap between extravagance and panic saving. The verdict npon Christmas buying was that the peoplo bought wisely and within their 'means. That should be the guiding principle in the coming months.