PROFITEERING.

Oamaru Mail, Volume XLIV, Issue 14703, 2 June 1920, Page 2

PROFITEERING.

A CAUSE OR A CONSEQUENCE OF HIGH PRICES P (By Sir John Fiiidlay, K.C., LL.D.) (New Zealand Times.) —Article No. 1.- — Are profiteers the result or the cause of soaring prices ? This question would probably be answered by nine out of j ten people by the qualified answer —not i the sole cause, but the main contributor ; to the cause, and yet in my judgment this is a grave fallacy. To get at the real sources of the high cost of living, we have to look much deeper than the price retailers are charging for a bottle of Mellin's Food or a yard of flannel. These are but symptoms of a collapse of the industrial" and commercial system that prevailed before the war. No civilised country can escape some substantial measure of dependence upon jthe brotherhood of nations for its prosj perity and the continuance of healthy ! normal industrial and commercial coniditions. The nations are a. co-operative family, and any serious dislocation of that co-operation reacts prejudicially in ultimate results upon the well-being of each member. We have in the past concentrated too much attention upon international competition, and too little upon the enormous gains existing before the war from international co-operation. This can be clearly perceived only by an open-eyed view of the structure, of the world's modern system of industry, trade and commerce, and of tho effect the war has had upon it. . Unprecedented upheavals, and * disturbances in the economic relations of Old World nations are profoundly influencing not only the economic position in New Zealand, but are threatening the very existence of an economic system which our nation, including the Dominion, has all'along regarded as natural, permanent,, and almost preordained. The present time is fraught with perilous change, and each of us is under a plain duty to anxiously view the situation and help so far as in us lies to support that policy which will make for economic and civil order, justice, and peace. With some sense of this duty, I desire to call the attention of my fellow-citizens to the grave crisis outlined by Mr J. M. Keynes in his recent work on r 'Tho Economic Consequence of the Peace." En doing this I shall draw largely from his facts, views, and conclusions. " The system which suffered such a rude shock by the world earthquake, which commenced in August, 1914, depended, we are told, for its growth on an artificial basis. Mr Keynes calls it a. double bluff and deception. On the one hand, the laboring classes accepted irom ignorance or powerlessness or were compelled, persuaded, or cajoled by custom, convention, authority, and the well-established order of society into accepting a situation ill which they took little of the product they were co-operating to produce. And .on the other hand the capitalist classes wore allowed to call the best part of that profiuce theirs, and while theoretically free to consume it, refrained from con-' suming the major portion of it, but accumulated it.' The,desire for a large fortune imposed a system of widespread saving among capitalists which made the accumulation of it in private hands the dominant motive. It was upon these accumulations of capital, under that system whichwere regarded as the best means of promoting progress. For snme day, when the accumulations were great enough, tho millenium would arrive, and overwork, overcrowding:, and under-feeding. "would: come to an end. This principle of accumulation, based on inequality, was a vital part of the pre-war order of society and of progress, as we then understood it. But such accumulation was a denial of the comrorts of life to great masses of the people. Tfca war. however. has brought a great change 111 the psycho- j logy of societv. The laboring classes are" showing themselves determined to refuse to forgo so largely, and the capi talist classes, no longer so confident ; of the future, seeking to emplov more fully their liberties, of consumption so long as they last. This, in the main, explains the widespread industrial unrest in the: Old World, and it* ! concomitant-of- the markedly: increased i extravagance of the rich. The accu- | rtraktive habits of Europe before- tlu* j,

war were the uecessary condition for 'maintaining the .iiimipi-au cf l nl l'J >lh l u -. Tho. surplus capital accumulated lj\ Europe was placed in foreign i fives:ments, which developed new resources of food materials and transport, and thus put under rich tribute the natural wealth and virgin potentialities ol the New World. . , Tho greatest part of the interest ami advantages accruing on these foreign investments were accumulated and it invested, and so tended to more lirmly establish this remarkable system. 13ut before the war tho equilibtium •thus established between Old AVorld and New World resources was being tiireatened. The prosperity .of Europe was based on the facts that owing to the large exportable surplus of foodstuffs in America, Europe was able to purchase food at .a. cheap rate >measuieu in the terms of labor required to produce her own exports, and as a result of her previous investments of capital, she was entitled to a substantial amount annually without any payment in return at all. The second of these factors then seemed out of danger, but as the result of the growth of the population, overseas, chiefly in the United States, the first was not so secure. But tho fertility of our race was working a great change. As lately as IIJ9O Europe had a. population three times that of North and South Amorica udded together. But by 1914 the domestic requirements of the United States for wheat (for instance) were approaching their production, and the date was evidently near when ther<> i would be an exportable surplus oiily j in years of exceptionally favorable harvest. Even since 1914' the; population of the United States has increased by seven or eight millions. "in other words, Europe's claims, on the resources of the New Word were 'beeoining precarious; the law of diminishing returns was at last asserting itself and was making it necessary year by year for Europe to offer a. greater quantity of other commodities to obtain the same amount, of food. There wo have one .of the principal reasons for that steady rise in the price of commodities which showed itself throughout Europe and America from 1890 to 1914. In these circumstances Eprope could by no means afford 1 a serious disorganisation of any of her pricipal sources of supply. i?ut important details i:i th© picture have yet to be added. Enormous increases in European populations accompanied the declining supplies from America. In 1870 Germany had a population of anly 40,000,001). By 1892 this figure had risen to 50.000,000, and by .Juno .'ilJih, 1914, .toabout 68,000.000.' In the years immediately preceding the . war the annual increase in German population was 850,000, and her emigration insignificant —for instance, about 20,000 in 1913 -. This enormous increase in population was only possible by a far-reaching transformation of tho economic structure of tho country. From being agricultural and main;.v sclf-supporting, Germany transformed herself into a vast and complicated industrial machine, dependent for its working on the eciuipoiso of many factors _ outside of Germany as well as within. Only, by operating this machine continuously and at full blast could she find occupation at homo for her rapidly-increasing population and the means of purchasing their subsistence from abroad. In tho Austro-Hungarian Empire the population grew from 40,000,000 in 1890 to at least 50,000,000 at the outbreak of the war. .. - European. Russia increased her population in a. degree even greater than'; Germany—from lass tlrui.loo,000.000 in 1890 to about 150,000,000 in June, 1914., In the years immediately preceding: the war tho excess of births over deaths in Russia as a whole was at the prodigious rate of 2,000,000 a year. Probably the ghastly upheaval 'of society in.Russia, owes more to deep influences and consequences of these enormously expanding' numbers than to Lenin or to Nicholas. (To be continued.)