THE POSITION OF THE COLONY.

Otago Daily Times, Issue 10263, 22 January 1895, Page 6

THE POSITION OF THE COLONY.

TO THE EDITOR. Sir, —Yonr this morning's leader on thg economic position of the colony appears to bS worthy of more than a mere paasing notice. Irrespective of the fallacious nature of tha measures which its bimetallic tone seems to suggtst as a remedy, the article draws tha conclusion that an adverse trade is necessarily an evil, and that such can only be counteracted by the restoration of ths value of our products to a higher range. There are here two propositions involved, both of which exhibit, as I think most eeono^ mists would assart, some fundamental miacom ception of the theory of international exchange, Let me first deal with the fact that, as yog put it, the balance of exports over imports dooa cot meet the liabilities due for interest/

Granted that your figures are correct, what da they indicate ? One of two things—that either the deficiency must represent increased in« debtedness in the shapa of liabilities, due and unpaid, or the incurring of new liabilities in the

form of inve«tm«nt here. In the former case, if it be so, then neither you, I, nor anyone ehe, ne«d to take any heed about the matter, except in so far t.s personal affairs may necessitate doing so, for, in accordance with the most elementary principle of trade reUtionships sach a position will soon correct itsslf. A country's liabilities on imports and interest may, for a time, outrun its immediate exporting powers, but it is inevitable that sooner oc

later a natural adjustment of the disproportion must take place. Any undue eicass of either imports or exports in any country whatever will influence production and con« sumption in such manner as to bring about an equilibrium. The slightest study of trade history or of any test book on exchange economics will show this. Illustrations of thia compensatory action abound on every side, more pointedly co in the caae of the United States some years ago, and in that of Victoria more recently.

In the latter case, if investment in the colony is being again renewed it should be a matte*

for congratulation. Of coarse this would mean increased imports —an indication which ia always displayed when a country is attracting capital. Whatever may be the cause of tha deficiency in our own particular caae, its adjust" monfc may safely bs lefS to the commercial instincts of the people, without aid by any (inch chimerical measures as are implied when you suggest tte formation of a " national party." Now, with regard to your remedy—tha restoration of prices to the old level, or to anch a point as will meet ihe deficiency—do you nod see what the effect would be ? Momentarily there would be prospects of its being wiped out, bat hijjh prices for raw products mean high prices for manufactured articles, with tha result that imports would, in the casa of this colony, absorb a considerable portion of the advance we should gain. But bsyend this, and what is of infinitely more importance, is the economic effect it would have on industrial conditions. Speculation would again set in and immediately display its effect in a tendency to anticipate prosperity by over* importations, especially of those articles that generally suit the requirements of such an era. If we are now outrunning the constable, nrach more s tiould we be likely to do so under conditions apparently more prosperous. Time and again hns this phenomenon been witnessed. The sobering, educating, and quickening influence that low prices or difficult conditions exercise on productive method is a positive gain to a community, and nothing could- be more disastrous than to oppose its natural course by artificial means.

The face is, Sir, consumption is the end at which all industrial effort aims. I grant that it is vety hard on those who have invested their money on tba faith of high prices continuing, but it is one of the misfortunes to which all ara

liable. Miscalculations occur in every branch of trade, and are not confined to any particular class. For tha moment production has been outrunning consumption, so prices are descend" ing to meat this, and so encourage a demand. If they go to a paint not commensurate with profit to as ruauy people as ms.y ultimately be required to furnish a supply, then production at this point will ceass, and an equilibrium ba restored.

I am quite aware that it is not a palatable thing to have to digest, but iv my opinioa fcha trading epoch which we are passing through will prove a beneficent experience that will leave behind some marked industrial advantages. What lad to the introduction of the frozen meat process but the impossibility of otherwise finding an outlet for surplus sheep ? What is it but the difficulty of getting rid of their frozen beef that has led the Queensland people to experiment in the shipment of live cattle to England, a move« ment that is lilroly to prove successful ? What bnt "hard times" gives an impelling force towards new inventions fresh method!, and the birth of new commercial ideas ? The law of. industrial progress means continuous industrial destruction, Bud where (his principle is ignored prosperity cannot long reign. In conclusion, Sir, disagreeable as it may be, what we bavo to do is to face the situation aa it is. Whilst low prices hurt the few thej benefit the many. Thssy have wot deterred the smtll agriculturist from taking advantage of the opportunity which their present lovrness have jiven him for obtaining Und. That the best results cr.n be obtained from hind farmed in small areas is an eeouornie fact, exception though it be to the general rule that applies to production. There is, so to speak, a natural reconstruction scheme going on, which, distasteful r.s it is, wo munt nevertheless regard aa likoly to prove a general gam. Such a boom as your article points to would arrest thin beneficial movement.—l am, &c., I X>ancdiu,-January.l9. A. Jjee .SJUTOfc