ECONOMIC PROBLEMS

Otago Witness, Issue 3595, 6 February 1923, Page 29

ECONOMIC PROBLEMS

PROFESSOR CONDLIFFE’S VIEWS. (From Our Own Correspondent.) In an address at the annual meeting of the Chamber of Commerce to-night Professor Condiilfo, Professor of Economics at Canterbury College, said the year just ended was one of quiet readjustment after the severe crisis and the credit stringency that followed the great fall in prices of primary products in the season 1920-21. Being very sensitive, the prices of primary products always felt the impact ot v changes in price level before the sluggish prices of manufactured anu ported goods. While wholesale prices . been falling in Great Britain since Aiav, 1920, and rapidly since September, 1920, the fall had not been either as sudden or as great as the drop in prices of New Zealand produce. If the present downward trend of prices continued till the world got back to the gold standard level of pre-war days, New Zealand was likely to be constantly in the position of buying in a market which was not falling until after the more sensitive prices of New Zealand products had fallen. The heavy drop in prices of primary products was, unfortunately, aggravated by two factors: An accumulation of heavy stocks of wool and other commodities, which resulted from the mismanagement ol the war- commandeer, and also by an exceptional harvest in the Old World during the year 1920. Those prices were accordingly dragged below the level to which other prices fell. Severe as the crisis had been, its effect had been a great testimony to the stability of - the dominion, and to the organisation of its industry and commerce. The necessary readjustment had in most cases been carried through without undue strain, and at no time had there been anything approaching a panic. The worst effect had been a degree of unemployment-, which, though serious enough, and productive of real distress in many cases, had been only a shadow of the distress which had visited other countries. All the prospects for the coming year pointed to a steady, though slow, revival of business and prices. Such a revival began in the United States in the early part of the year, and was foreshadowed by easier rates of credit. The upward turn of prices in America was followed by a similar development in Great Britain in April, 1922. There 'was every reason to expect that the season 1922-25 would show substantial rises in the prices of our primary products, and so give Use dominion time and opportunity to put its house in older. 'That rise was likely to be greater in the prices of farm products than in manufactures, in proportion to which iha prices of farm products were dragged below the general level in 1920. The re covery which was due should not, however, be interpreted as a return to pre-war conditions of ever-rising prices and continuous prosperity. Still less should it be made the occasion of a boom. The prospect of a continuance of anything approaching the present low level of prices must make every New Zealander give serious consideration to the very heavy overhead expenses of the country. The only way in which the position could be met was by counteracting the low prices by better and more economical pioduction and a greater output. The weak points in the industrial structure of the dominion were the unreal and inflated land values, which in only too many cast.* would have to lie reduced, either by ar rangement or by failure and the extremely heavy expenditure of the Central Government necessitating taxation that was a millstone round the neck of industry. In all its forms the present methods of taxation urgently called for investigation and readjustment. In particular, income tax should be made a tax on personal income, instead of upon company profits. The time was

overduo when a thorough inquiry into the taxation system as a whole should lie made on the expenditure side. Apart from matters of policy in State expenditure, it was probable that a competent scrutiny ■would reveal many possibilities of retrenchment and economy. The present system of budgeting and the expenditure of public funds would not be tolerated by the management of any private business, and we ought to require from those who controlled the expenditure of public funds the same standard «f care as the law demanded of trustees. Ministerial respopsibilitv in Parliament, which had little or no criticism to offer on finance, was not, sufficient. guarantee of tbe efficient oontrol of expenditure