WHEAT AND WORLD PRICE LEVELS

Taranaki Daily News, 15 August 1931, Page 4

WHEAT AND WORLD PRICE LEVELS

(To the Editor.)

Sir, —While in no way desiring to rush in where angels fear to tread, I would venture the opinion that overproduction of wheat has. much to do with the world fall in price levels. .What gold is to the monetary system wheat is to the commodity system, but while the rise in gold production brings about a general rise in price levels, overproduction of wheat brings about a general fall. When we realise that three out of every five persons engaged in agriculture in the world’s great wheat belts are'engaged in wheat production alone, and that the. financial ramifications of the. industry gridiron' the whole commercial system of the countries involved, it is not surprising that a slump in wheat values is worldMvide in its effects. A slump in the value of any other commodity is local, and is sectionally confined to such'commodity, and has little or no effect upon the price level of other commodities. Wheat i«3 the world’s main commodity current; it is man’s first want, and the last thing he will do without. All other forms of manufacture and production whatsoever are tributaries leading into this current, the rise or fall of which governs the volume and flow of these tributaries.

The regulation of price level gave wheat an inflated value and brought about a boom in its production. The ■world’s wheat farmer awoke to find that there was a two years’ supply visible and available. Then control vanished, and the dam burst; the channel of consumption was flooded, and brought about stagnation in all its tributaries. Wheat produced on a fixation price of 6s. is being sold at Is. per bushel. If the producer is selling at a loss, he cannot buy; if he cannot buy, the manufacturer cannot sell; if the manufacturer cannot sell, he cannot employ labour. So the chain of sequence takes us back to the wilderness of unemployment, While over-production brings about the results mentioned above, under-production acts inversely and brings about a rise in general price levels. Wheat being the source from which most of human energy is drawn, it necessarily follows that with the rise in. price of such energy the productive co-sts of all other commodities whatsoever must rise automatically. My theory of world price level may be all astray, but it appears to me that wheat, and not gold, governs the world’s commodity values.—l am, etc., FRANK BELL. Midhirst, August 14.