VIEWS ON CURRENT TOPICS

Taranaki Daily News, 5 September 1935, Page 7

VIEWS ON CURRENT TOPICS

SUGGESTED QUOTA FOE BUTTER.

MR. COATES’ VIEW CRITICISED.

(To toe Editor.)

Sir,—Mr, Coates, according to yeur issue of September 3, says; “It would be infinitely better to regulate suPPhes, which would bring satisfactory prices and to dispose of the surplus a$ a gift to people both in New Zealand and abroad who did not haye sufficient money to become normal consumers.” Could foolishness go further? After four years of unparalleled depression in which socalled statesmen have resolutely set their faces agaipst recognition of the true cause, namely, that it'te a monetary one, and during which every effort to eyre it by non»monetary measures has lamentably failed, we get a pronouncement of this nature. ’ All attempts to curtail production (and they have been tried in connection with wheat, cotton, coffee, sugar, rubber, cop- : per and, tin as well as butter) have failed, a? have all the doles and emergency works for unemployed, expert premiums, import restrictions and embargoes. In Denmark, Holland, Germany and America thousands of cattle have been slaughtered and other measures taken, all without avail, to achieve the impossible task of getting higher prices from a diminished purchasing power, space forbids any lengthy exposition of these measures, but those interested may consult the report of the Dairy Industry Commission, pages 144 to 149, What is to be gained by restricting supplies, even if higher prices could be assured for smaller Quantities? No more money could come into New Zealand. The purchasing power of the consumers at Home remains approximately the same, and even if they spent the same amount on butter at a higher price as they do at the lower price (which is extremely unlikely) it simply means they would buy less in quantity, as, of course, is intended. But a simple arithmetical calculation will show that to raise prices by this method means a further approach to disaster. For instance, to raise prices by one-fifth means a reduction of output by one-sixth, or, to carry out Mr. Coates’ suggestion, dte free distribution of onesixth of our output. Now the natural consequence of a rise in prices is increased output which, in turn, as it overtakes purchasing power, causes a further fall in prices. Assume, however, that by some means increased production is prevented; then the natural consequence would be that instead of farmers producing for free distribution they would be forced, as in Denmark and elsewhere, to slaughter about one-sixth of their herds and further bq severely restricted as to rearing calves. The capital losses involved would more than offset the additional price received for butter, not to mention the depreciation of farms not used to capacity, nor the reduction of labour required on the farms and the consequent addition to the ranks of the unemployed, It may be said that quotas will be forced on us sooner or later by England. Thte may be so, and it will be pgtagtrophic for us if it means a reduction of our present supplies; but this seems hardly likely, whereas a voluntary re, strietton in conjunction with Denmark of any nfter country is just a form erf committing national hari-kari. Further, what is to prevent the other bytter producing countries, EsthdPia, Finland, Sweden, Russia, ete., from “crabbing’.' the market? Finally, it would he interesting to have Mr. Coates’ view on the following; “If you can contemplate giving away free butter to the OX’ tent of, say, one-sixth of pur production would it be better or worse to give instead, free money (or purchasing power) to the proposed recipients, and why?” Anybody else may reply on behalf of Mr. Coates, provided they dop’i ask “Where is the money coming from,’ 1 rrrl aHI, fitC., , F.D. New Plymouth, Sept. 4.