THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JUNE 22, 1929. INCREASING PRODUCTION.

New Zealand Herald, Volume LXVI, Issue 20288, 22 June 1929, Page 12

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JUNE 22, 1929. INCREASING PRODUCTION.

Easy monetary conditions and lack of industrial enterprise are the outstanding features of the economic situation in New Zealand to which the chairman of the Bank of New Zealand in his annual address has directed public attention. The general public is already acquainted with the major facts of this situation.- For two years there have been favourable trade balances; opportunities for the employment of this increment to the national wealth have been limited, and investment has been sought overseas, directly .by individuals, indirectly through the distribution by the banks of funds left in their care on fixed deposit. There has been a disposition,, to attribute the lack of enterprise to want of confidence, and while that factor may. have -been potent for some time, its influence has by now probably become insignificant. The explanation given by Sir George Elliot leads to a familiar conclusion—the virtual cessation of new settlement —but his diagnosis of the economic stite of the country is sufficiently novel to arrest public 4 attention. Speaking with the comprehensive knowledge gained from the widespread activities of the bank, Sir George Elliot states that most of the trades and industries are overcrowded, competition is excessive, few are working to full capacity, many burdened with excessive expenses are just making both ends meet. Capital that might be used for industrial expansion, if there were room for it, is competing in a restricted field of investment; the leading financial institution cannot employ its resources. In his judgment, commerce and secondary industries are fully developed in proportion to the population; indeed, there has been excessive development, so that if the progress of manufacture is to continue, and the cost of the whole organisation of distribution is to be reduced to an economical level, means must be found of expanding the population. Sir George Elliot rejects the proposition that the next stage of development should be an expansion of secondary industries under the protection of higher tariffs. As a banker, he bows to < the ideal .of universal free trade; as a dispassionate observer of realities, he acknowledges the benefits of moderate protection, but he lucidly exposes the' fallacy of l'aising the tariff to foster local industries, which must virtually rely on the domestic market, to the detriment of primary industry. The distinction sets against local manufacturing enterprise not merely the actual rural activities, but also the vast industrial and commercial organisations by which the products of the soil are prepared and carried to market. Yet, while the growth of population has been arrested, there are " great blocks of unimproved lands lying idle." With some diffidence, Sir George Elliot suggests that the development of this land might be encouraged by exempting it from taxation for a period of years—that if the inhibitions of the graduated land tax were lifted, large blocks might be taken in hand by companies and developed to the productive stage. At the outset the - proposition will be confronted by the popular belief that settlement can be advanced only by individual effort on small holdings, and that the occupation of a large block of land, by an individual or a company, is almost a crime. Yet, in practice, the small holdings are generally created by dividing improved lands, so that there are no real extension of settlement and little increase in production. Moreover, this method presumes that every potential settler has the resources and the equipment for independent management and control of a farm, and makes little provision for those who would work more happily and more efficiently under direction.

Commerce and industry are being organised more closely than ever on the principle of mobilising resources under skilled management; political doctrine and practice are striving for individualism in farming, without regard for its increasing complexity or the capabilities of the available man-power. Two results are apparent: farmers are striving to strengthen their position by cooperation, and, because of the inevitable limitations of individual effort, few are able to undertake the

development of unimproved land. To any impartial observation, the proposal outlined by Sir George Elliot appears worthy of serious attention by the Government and Parliament. Lauds that are now lying idle manifestly produce little, if any, taxation, so that nothing would be lost if large scale development enterprises were encouraged to occupy extensive blocks with the object of preparing them for subsequent division into small farms. On the other hand, the country would gain greatly, immediately by the opening of a new field of employment for both capital and labour; ultimately by the transformation of wilderness into production, and by the expansion of population and the consequential progress of secondary industries. The idea has only been sketched by Sir George Elliot, but if the Bank of New Zealand is prepared to lend the assistance of its resources to tho development of such a policy, it is manifestly worth thorough investigation. In recent years production has been increased by more intensive use of cultivated lands, but that expansion cannot be maintained indefinitely. Sooner or later the peak will be reached, and even if there is not actual deterioration, a limit will be set to the population that the country can support, and the development of secondary industries be definitely arrested. The Dominion's great need is the extension of its field of production; there is no lack of idle land ; it has abundant capital resources; additional population could be rapidly recruited- The real meaning of Sir George Elliot's speech is that, given reasonable conditions, capital should be diverted to the cultivation of the Dominion's largest estate —its unimproved lands.