THE COST OF LIVING.

Rangitikei Advocate and Manawatu Argus, Volume XLV, Issue 12082, 19 June 1920, Page 5

THE COST OF LIVING.

f Speaking afc the Jmiiaal Meeting df the Bank of New Zealand, the Chairman, Mr Beaunfrarup, referred to price levels, saying the question of the cost of living continues to be a "burning" one, and the fact that prices have continued to rise notwithstanding the conclusion ot hostilities and the return of the fighting men to peaceful avocations, is leading many to wonder how long existing price levels are likely to he maintained. Some there are who affirm that high prices have come to stay, but in thafcview I oannotshare, though I admit that the range of future prices may somewhat higher than before the War.

Iu the Napoleonic War English prices rose 75 par cent, and they took eight years to become normal again. In the American -Civil War prices rose 100 per cent, and took over twelve years to become normal. How long" it w'll take ou this occasion to reach normality it would be impossible for anyone to forecast, but it seems obvious that the process of deflation has set in. In America, Japan, and, to a lesser extent, in Great Britain, prices of commodities have already slumped, the speculative fever has been curbed by the Banks restricting credit, and financial crioes have resulted. The changes that have taken place in these countries are bound to have far-reaching effect. Iu the matter of regulating prices, some people are disposed to look for relief to Government intervention and control, but while, as a temporary measure, good may result therefrom, it is fairly certain that no permanent relief can he secured in that way The generally accepted view among people qualified to judge is that the less Government interferes with trade and industry the better. Tnis principle was well enunciated by Lord Muuaulay over half a century ago when discussing suggestions that had then been made for Government control of and assistance to trade. He remarked:—

"It is not by the intermeddling of the omniscient and omnipotent; State but by the prudence and energy of the people that England has'hitherto been carried forward in civilisation and it is to th*: same prudence and the same energy that we now look with comfort and good hope. Our rulers will beat promote the improvement of the nation by strictly confining themselves to their own legitimate duties, by leaving capital to find its most lucrative course, commodities their fair price, industry and intelligence their natural reward, idleness and folly their natural punishment, by maintaining peace, by defending property, by diminishing the price of law, and by observing strict economy in every department of the State. Let the Government do this; the rjeople will a saarodly do the rest. 1 ' These views still iind general acceptance anions; the political economists cf oar day. In searching for remedies for the existing evils we naturally first make au endeavour to seek the causes of the evils that we wish to remedy. There wa find ourselves at once on debatable ground. One school of economists maintains that currency inflation is at the root of all price inflation. Another school affirm that price inflation is solely thef'resnlt of the operation of the ordinary laws of supply and de:r.a!id. For my part, lam dispose:! to attribute the appreciation in prisea, from which the world is at "present suffering, to no single cause oat to a variety of causes, including both of those just mentioned. Th>i question is a very complex one, because a multiplicity of influences are at work to'bring about the result arrived at, each exercising a varying degree of effe'ct according to varying circumstances and the nature of the commodity concerned. It would certainly be wrong to ascribe to anyone particular influence the whole responsibility for the unenviable situation in which we now find ourselves. But in looking for remedies, as we undobtedly must if we are to restore ourselves to more tolerable conditions, we can see broadly individual influences which tend to the perpetuation of price inflation, and if these be dealt with and removed, even though only one by one, we shall be assured that we aro gradually traversing the road which will lead us back to more reasonable price levels. Among these remedies the following unmistakably take primary place : (1) The exercise of the strictest economy in public and piivate expenditure. (2) Honest effort to increase production to the utmost possible extent. (3) Encouragement and development of every class of industry and uncompromising discouragement of all speculation. (4) Deflation of the world's currencies, which will to a large extent result from the application of the three remedies first mentioned.

Along these lines it ia oar duty to proceed if we wish to hasten a return to more normal conditions, and I venture to affirm that, if the above remedies were pnt generally into active operation, it would not bee long before a welcome and substantial change in the situation would become apparent.