ECONOMIC WELFARE

Taranaki Daily News, 2 June 1934, Page 17 (Supplement)

ECONOMIC WELFARE

AGRARIAN PROTECTION. Auckland, May 31. “Since the war created crushing international indebtedness undischargeable in normal fashion by the exchange of commodities and services, human interference with the once axiomatic laws of supply and demand has created a situation of unprecedented complexity,” said the Governor-General, Lord Bledisloe, in an address to the Chamber of Commerce this evening. “No longer is the relative cheapness of a commodity—even one of the necessaries of life—a criterion of its admissibility to any mark other than that of its own area of production. Expressed alternatively each country appears nowadays to deem it on balance conducive to its economic welfare to pay extravagantly for any commodity that can be produced within its borders—thereby raising the cost of living and reducing the value and purchasing power of its currency—rather than permit the unrestricted importation of that commodity from some other country.,, “Thus, at the beginning of this year of grace 1934, the price of butter was 70s per cwt. in London, 184 s per cwt. in Berlin and Brussels, and 238 s per cwt. in Paris, as the result of the measures of agrarian fiscal protection adopted in these industrial countries. The export of butter to the United Kingdom from New Zealand has, it is true, increased by 90 per cent, in five years, and that from Australia by rather more, but the swamping of the British market with this and other milk products to the growing discomfiture of the British dairy farmer is due less to this cause than to the deflection into the British market of that portion of the output of these products from Denmark, Russia and other counries which used formerly to enter what are now prohibitively protected Continental markets. “In 1928 the United Kingdom absorbed 60 per cent, of the world’s butter exports; the German restrictions alone have increased this proportion to 82 per cent. Protection of this character (provided by import quotas and tariffs) which used seldom to exceed 25 per cent, ad valorem has in recent months risen to heights undreamt of in pre-war days, as, for instance, on butter entering France 300 per cent, ad valorem, on raw wool entering the United States 120 per cent., on wheat entering Italy, Germany and France from 150 to 300 per cent., with the result that wheat was in January last three times the world parity in the two former countries and three and a half times in France. Between 1927 and 1931 Germany, France and Italy together imported annually 197,000,000 bushels of wheat. * This year it is estimated that they will be, on balance, wheat exporters. Although five years ago the United Kingdom was the principal market for beef, Continental countries were importing about 6,000,000 cwt. This figure has now been reduced to 4,000,000 cwt., the bulk of the difference passing into the British market and materially depressing meat prices.

“Agrarian protection has not always, or indeed mainly, been designed to promote local production, but rather to improve national balances of trade of international payments, and to maintain a peasant population as a bulwark against Communism and a reservoir of man power in the event of war. The rise in commodity prices inevitably raises the internal costs of industrial production or lowers the standards of living by dint of reduced consumption. Thus, while the low price of butter in Great Britain has increased its per capita consumption by 40 per cent, over the 1927 level, there has been a corresponding decrease in consumption over the greater part of industrial Europe.

“The effect upon health and physical efficiency of inadequate supplies of essential human foods is a problem deserving close scientific investigation and indeed monetary calculation, especially in those countries where, there is an expensive public system of health insurance, and hospital service, the scope of which may be greatly amplified by malnutrition, or of education, the efficacy of which may be marred by the same cause.”