The Taranaki Herald. DAILY EVENING MONDAY, MARCH 1, 1920. PRODUCTION AND PRICES.

Taranaki Herald, Volume LXVIII, Issue 16680, 1 March 1920, Page 2

The Taranaki Herald. DAILY EVENING MONDAY, MARCH 1, 1920. PRODUCTION AND PRICES.

Of the various causes to -which the high cost.of living is attributed the most potent is undoubtedly the shortage of commodities. The inflation of credit makes consumption greater than it would otherwise be, hut if there were no such inflation there would still not be sufficient supplies to go round, and when supplies are not equal to demand competition forces prices up. Profiteering to some extent affects prices, hut if the truth were known it is probable. that this cause is very much over-estimated. Moreover it is the fact that demand exceeds supply which gives the profiteer his opportunity. We must therefore fall hack upon shortage, of _ production as the real cause of the high cost of living. Then comes the question as to the best method of remedying the trouble. To keep prices down by legislation or regulation has been tried with unsatisfactory results, as in the case of butter in New Zealand, where the butter-makers have had to be given compensation for the loss they sustained in supplying the local market at a lower price than was obtainable by export. Limiting prices artificially discourages production. What is required is encouragement of production. High prices do this, and they work their own cure, too, because when the supply exceeds the demand prices come down. If there were fifty empty houses in New Plymouth instead of as many or more people looking for houses rents would of a certainty be reduced. If the shopkeepers, no matter what their trade, could not find customers for their goods they would reduce prices. Houses might be more rapidly if carpenters, bricklayers, and other workmen were to work longer hours. The shortage of goods in the shops would soon he overcome if factories were kept going at high pressure.. Labour, hotvever, has the idea that this is a device of the enemy to make greater profits and to bring about a reduction in the wages paid. It is quite true that labour is equally a commodity with bread, or beef, or boots, and that it is subject to the same general law of supply and demand. If there are more labourers than work available for them the tendency is for wages -to fall. If there are not enough labourers competition for their services causes wages to rise. But jnanjyflf,_the .workers Igsq aig_hi^of_

tie important fact that the' high cost of living chiefly affects them. A- pound a day is no better for them than fifteen shillings used to be if th® pound will not buy so much as the fifteen shillings. ,We will not go so far as to say that high wages are a delusion, but they have not proved an unmised blessing. It is, however, .very unlikely that either wages or prices will go back to the old level. A readjustment will come about and something like balance be restored, with wages (real wages, that is) on a permanently higher scale than they used to bo. But to bring about this adjustment it is first of all necessary that production should be increased until it is able to meet the normal demand for goods. Labour, instead of restricting output and thus contributing to the high cost of everything, should take full advantage of the high rate of wages, relying upon reaping an advantage from the consequent fall of prices of goods they require to buy whiqh will more than compensate them for any subsequent reduction that may come about in the rates 6 of wages.