The Daily News THURSDAY, NOVEMBER 7, 1935. GUARANTEED PRICES.

Taranaki Daily News, 7 November 1935, Page 4

The Daily News

THURSDAY, NOVEMBER 7, 1935. GUARANTEED PRICES.

OFFICES: NEW PLYMOUTH, Currie Street. STRATFORD, Broadway. HAWERA. High Street.

The forceful address given by Mr. Walter Nash, M.P., at New Plymouth last night consisted principally of an indictment of the Government’s administration during the past four years and an exposition of the Labour plan for giving guaranteed prices to farmers. In regard to his criticism of the Government Mr. Nash claimed that in spite of the enormous drop in national revenue there was no justification for the policy of deflation entered upon by the Ministry. From that policy he traced all the hardships and anomalies that have attended the relief of the unemployed and the more serious effects of the depression that even he was constrained to admit was world-, wide. It is, of course, a view Mr. Nash or any other elector is entitled to hold and to proclaim, but he did not reply to what must be the obvious retort, namely, that the policy followed has kept sound the credit of the Dominion, has enabled a considerable amount of recovery to be made, and has done so without any of the extremely grave experiments that are bound up with the inflationary policy Labour is pledged to adopt if it obtains office. One of those experiments is that in regard to guaranteed prices for farmers. Mr. Nash claimed that such a system was not an experiment. He instanced the duties which give a guaranteed price to New Zealand wheatgrowers — not a particularly happy illustration to use in Taranaki—the guaranteed prices given in Australia to the sugar grower, those given in England to the milk producers, and various guarantees given in other European countries. He said very little about the guarantees resting upon a higher charge to the local consumer, nor did he refer to the difficulties that have been created through consumption being limited by the high cost of commodities and cheaper food stuffs—such as margarine for butter —being purchased in their stead. The experimental aspect of the guaranteed price scheme lies in the fact that its success depends upon the finding of markets oversea for New Zealand products. It is true that for the first year a Labour Ministry would not depend upon such agreements in order to arrive at a guaranteed price. For that year an average of prices obtained over a term of years would be struck and the guarantee paid on the figure so arrived at, there being, Mr. Nash contended, little likelihood of any great increase in production in that period. The guarantee would be paid on all primary products and irrespective of the individual needs of the producer. After the first year the guaranteed price would be fixed at a margin above production costs that would give the farmer “a decent standard of living.” Meanwhile world markets would be explored to ascertain how much New Zealand produce could be consumed overseas under trade agreements that would exchange goods for goods on the lines of agreements made by Britain with other countries. There is no man and no Government in a position to guarantee the success of such a quest. Nor did Mr. Nash give any explanation of what would happen to

the Dominion’s secondary industries if imports are to be increased in order that exports may flourish. When oversea and domestic requirements are known the primary industries will be asked to supply that quantity at a guaranteed price for each commodity. If any or all of them produce more than the quantity the Ministry decides is required, the Government will dispose of the surplus in the best market it can find, which the farmer must accept. The money for guaranteed prices is to be found by the Government transforming the Reserve Bank into an entirely politically directed State institution which will issue banknotes to cover the payment of the guaranteed prices. Should exports bring better returns than those prices the balance will be placed in a special account with the Reserve Bank. Should they bring less, the Government will “borrow” from the bank, by then wholly a State institution, so that the State will be borrowing from itself. Domestic consumption of primary products will be increased by a general rise in the standard of living, also, presumably, brought about by the issue of more Reserve Bank notes as required, and so the inflationary policy will expand until everyone is getting better “prices” in money that may become of less and less value. The Labour plan may be attractive to those who prefer endeavour and the returns therefrom controlled and regulated by the State. But a plan that includes a price fixed upon production costs —factors as variable as consumption demands —the making of agreements with countries which show few indications of a desire to absorb more exports from the Dominion, and the payment to farmers in inflated currency is not unjustly termed a tremendous experiment rather than a proven method.