THE BASIS OF CONFIDENCE.

New Zealand Herald, Volume LXIX, Issue 21109, 17 February 1932, Page 12

THE BASIS OF CONFIDENCE.

Sir;, —Mr. A. M. Seaman, president of the Auckland Chamber of Commerce, in pointing out that interest bulks largely as an item of casts, arid in advocating a reduction in the rate of interest, sidetracked the main point. In dealing with the problem of unemployment it should ha borne iri mind that the success of secondary industries depends on the success of primary industries, .so far as New Zealand is concerned.' Naturally, the item of interest is prominent. For instance, in the case of a dairy farm balance-sheet, it is the item of cost for the use of principal on land, stock, plant and working capital, while costs of manufacture, distribution, commissions, etc., are not even mentioned.. I <l6 not for a moment advocate a high rate of interest, but cost* of production, manufacture and distribution should coma down with interest rates, also the rental value of city property, into line with the value of primary products. During the slump in rural land values, when investors poured their capital into the cities, thereby attracted labour from the land to the cities, created an artificial value for labour, building material and city properly, which means that all three must be revised and brought into line with the averago earning capacity of rural land—our main source of revenue. Briefly stated, the "basis of confidence." so far as New Zealand is concerned, is to increase production of primary products and, in the aggregate, produce them without' loss to the producers, which will support secondary industries on sound lines, eliminate unemployment and provide on outlet for the large amount of capital that is at present locked up awaiting satisfactory im vestment. ' G. W. Richards. Hamilton, February 15, 1932.