THE WAGES PROBLEM.

Taranaki Daily News, 12 June 1926, Page 11

THE WAGES PROBLEM.

ROOT OF FARMING TROUBLE. EFFECTS OF PROTECTION. TOO MUCH FINANCE. (By E. Earle Vaile in Auckland Herald.) “For the labourer is worthy of his hire” ’ comes from the greatest of the books and contains a very great truth. It implies that the worker has earned his money. He is under no obligation or compliment to his employer. But he must be a labourer, not a loafer; he must have worked—have given fair value for his wages. All modern economists are in accord with this view—that men are paid out of the product of their own industry. Some may dodge, some may loaf on their fellows, but in the mass men must earn their wages or they will not get them and their “right to live” will be in extreme danger. I do not propose to elaborate this point; it has been so often demonstrated, and it is unchallengeable. The object of our inquiry is to ascertain what is a fair wage. There are three things necessary to production—labour, management and capital. While I have stated these in the order of their absolute necessity, yet, under modern conditions capital is really the first essential. No work can be started without capital. To give a simple illustration, of what use is a workman without tools? Then comes management, including invention, enterprise, economy, disposal of produce, etc. Lastly, the labour more or less skilled until we come down to the unit—the unskilled labourer with nothing but the muscle God gave him. In what proportions should the common produce of the undertaking be shared among these partners? In times past it may be that capital and managment obtained more than their fair share, but nowadays labour is aiming at getting the whole—and in some cases more than the whole. But if capital cannot get some reasonable return it will simply disappear; if brains are not rewarded they will not be available, and industry must cease. Now there are certain immutable laws which no government—and not even a trade union—can alter. One of these is that a share or part cannot be greater than the whole. Another is that it is impossible to take out of a part more than has been put into it. In New Zealand, owing to political pressure, wages have for some time past been assessed on an absolutely false basis. A CRUDE SYSTEM. Nothing could be cruder; nothing more unscientific. Is a man entitled to have bread, is he entitled to have butter on it, and to add jam to that? Must he walk to work or may he ride in a tram or in his own motor car? Cer* tainly he may enjoy all these things—if he can earn them. Otherwise he can enjoy them only by cadging on his fellows. “Corners,” combinations and monopolies in labour and in commodities are some of the means by which he can so cadge, and when these means have been exhausted there is protection to fall back upon. When an industry fails to exist on an economic basis and provide its labourers with the luxuries to which in their own estimation they are entitled they form a combine. A corner in labour (commonly called a trade union) is formed. Under threat of cessation of industry higher wages are conceded. Next a combine of employers is formed to force the price of the produce of the industry up to the point at which the consumer (the public) will rather do without or can buy elsewhere. When this point has been reached labourers and employers join together to cry aloud to heaven —in the form of the State —for protection. And by this means the unfortunate public is forced again to pour more into the industrial pot so that those engaged in the industry may.help themselves to more and more comforts and luxuries. A CONCRETE ILLUSTRATION. A good illustration of the operation of these processes is fonnd in the timber | industry. Years ago good timber could be bought at a low price. Trades unions were formed and demanded higher —yet higher wages—and certainly not more work. To meet this position strong combinations of milling companies ’ were formed to raise the price of timber. They cared little what wages were paid. They simply put them on to the price of their produce—with a very good profit added—until to-day bush labour is paid £7 per week and the price of timber is doubled. Having reached the limit it is found that timber can be brought from the uttermost corners of the earth and beat our millers in their own home market. Now they are shouting “help” and demanding protection—or rather more protection for they have already 2s per 100 ft.. If the Government is weak enough to. yield, another 5s may be put on and this will promptly be added to the price, so. the public is again forced to pour funds into a the timber trade’s pot so that those engaged in it may enjoy more luxuries, raise their “cost of living,” and consequently by so much lower the “standard of living” of all those outside the timber combine. Then these outsiders in their various trade groups—lawyers, bootmakers, physicians, butchers and the like—form their own separate combines to get back on tlie timber group and on one another, and so it goes on until we find the ultimate ideal of the one big labour union (or corner) and the universal strike. in which we reach the limit of absurdity and impracticability. It has been tried and found wanting. The degree of its success has proved the completeness of its failure. THE FARMERS’ POSITION. Outside all combines and beyond the each of protection stands the farmer. What chance has he? None whatever!

In the first place lie is an absolute individualist and in the second place the distance by which the several dwellings are separated form an insuperable obstacle to effective combination. Although it looks simple he never can and never will combine to starve the public into submission; and it is not desirable that he should. If butter were produced on. trade union principles—or want of principles—it could not be sold for less than 5s per lb and meat would need to bring 2s per lb. Once trade unionism is applied to farming that will prove the “stone end” of New Zealand. As the farmer has to sell in the overseas market protection cannot help him. And more: out of the price of his productions he has to pay freight and all the costs of selling in a foreign market; whereas timber millers and manufacturers selling in the local market have, besides the artificial protection. the natural protection of the freights and expenses which their overseas competitors must pay. The national income is really the amount realised by the sale of our exports. Practically the whole of these exports come from the farms—so that it is indisputable that farming is our basic industry—the one really essential to our national prosperity. It follows then that it must be preserved and built up or we perish. The only way to sustain it is to abandon all false standards and let the basic wage be ascertained in a truly scientific manner. The suggestion has been made, and I see no reasonable objection to it, that the basic wage in New Zealand should be ascertained by a series of experiments on Government farms to ascertain the highest wages that the produce of farming will bear. Let that be the basic wage. It will be quite a sufficient obstacle ■ for ordinary farmers to pay wages fixed by the use of the unlimited capital and highly trained staffs of Government farms. It is often argued that the present disastrous condition of farming in New Zealand is due to excessive land values, but a little reflection will show that this is not so. I make bold to say that if a piece of unimproved land anywhere in this country were given to the average farmer he could not, under present conditions, improve it at a profit. This is indeed sufficiently proved by the fact that practically no lew land is being brought into cultivation in New Zealand. Indeed the deterioration on land formerly improved greatly exceeds the improvement to new country. Unless something effective is done we must be prepared to see all second-class lands go out of use and only the best and most favourably situated lands remain productive. Can we afford to face such a position? I say we cannot. It is often objected that any improvement in the farmers’ lot only results in an increase in land values and in undue speculation in farms. This is true to a large extent. It is the one strong argument against the actual. operator being also the freeholder. But I think the position could be met, or at least vastly improved, by the Government taking, say, half the profit if the farm be resold within two years; one-third if resold between two and four years, and so on till at, say, the tenth year, the occupier might be regarded as having been a bona fide farmer, and allowed to retain any profit which he may have been able to realise. Nor is want of finance at the root of farmers’ difficulties, for many farms absolutely free from encumbrance cannot be made to pay. In my humble judgment much more of our trouble is due to over-finance than to under-fin-ance. In the boom years the banks and other lending institutions simply thrust out their money regardless of whether farms could carry stock enough to enable payment of interest and provide a margin. Farms were commonly sold with ridiculously small deposits. “Buyers” need not provide even the live and dead stock. The auctioneers would do that. Nothing tends to mad speculation and boom values more than overeasy finance. The man who has saved up a substantial deposit is more capable in judgment and more careful in investment than the adventurer with a mere nothing. Even now values are maintained at a false level by ridiculous over-finance. Do not the trustees of the public funds lend 95 per cent, of the value at 1 per cent, below the market rate—a proceeding that would land private trustees in gaol. When we come right down to bedrock we are faced by the fact that farmers returns cannot be increased—-they sell in competition with the world. If he is to live his cost of production must bo lowered.