WHAT THE FUTURE HOLDS.

Star (Christchurch), Issue 16584, 17 November 1921, Page 4

WHAT THE FUTURE HOLDS.

DOMINION’S EXPORT TRADE question of wages and PRICES (Special to the “ Star. 5 ) AA ELLINGTON, November lb. Mr T. Shailer AVeston, president of the New Zealand Employers’ Federation, delivered a lengthy speech at the annual meeting of the federation today. Dealing with the economic and industrial outlook, he said : The most difficult question® now facing us are: firstly, wnether there is ahead a long period of low prices tor our primary industries and, second I > , if so, wliat are the best steps to ta&e to adapt our industrial and economic machinery to such a position? There are many signs that our primary producers will have to steel themselves to meeting low prices for a time. Great Britain is our main customer. To feed her population she is dependent almost entirely upon international trade. In this she lias to face the competition of Germany and Belgium m a like position, and the United States whose manufacturers hare the advantage of a very large and closely protected home market. But international trade is based firstly on international credit, and secondly is limited by the purchasing power of the various nations, and by the number and extent of the wants they cannot themselves supply. International credit depends entirely upon the stability of exchanges, political security and absence ot labour unrest. The inability of the European nations to maintain the gold standard, political and social unrest in Central and Eastern Europe, and the inflation of their currencies by using the printing press as a method of raising loans, means the loss of these two essentials. The real impoverishment of the belligerent countries through the war has become clearly apparent now that the fictitious prosperity due to increased national borrowing and the feverish post-war demand for certain commodities, irrespective of their cost, has disappeared, and this, combined with the heavy taxation, has decreased the purchasing power of all communities. Russia, through internal dissensions, is no longer a customer for anything. Apart from this, during the war many nations were forced to produce their own supply of manufactured articles. Everywhere local industries received a great impetus. The protection afforded by the war was more effective than any tariff. In New South Wales and in South Africa, lor example, big ironworks have either sprung up or are approaching completion. Although Great Britain is at last again desirous and able to supply her old markets, she is brought up everywhere against a harrier of higher protection tariffs. Whilst the scope for international trade in manufactured articles is thus limited, the capacity of Great Britain, Germany, Belgium, the United States and. to a lesser degree, certain other nations to supply has increased. Owing to the war the organisation and plant of factories has been improved and the number and size of factories increased. K EENF/R COM PETIT TO N Consequently there is, and will be, a much keener competition afnong the great manufacturing nations to supply a less demand, and the inevitable result will follow--little or no profits and low wages. With Great Britain's purchasing power thus lowered, she cannot pay high prices for her food supplies. Her only hope of maintaining her present population is the importation of food at the lowest possible prices. New Zealand will consequently have to accept lower prices for her meat, butter and dairy products. Aloreover, tho extraordinary demand for most primary products during the war has led to developments all through the world. Large meat works, for example, were established at Nanking on the Yanjr-tse-Kiang, also in Brazil and at Mauritius. South Africa and Uganda, are expanding. England is the best and safest customer in the world, and every seller tries tho English market first. Unless, therefore, wo. are able to establish a demand for our products based on their special qualities, competition with others, combined with the decreased purchasing power of Great Britain, will mean lower prices. There is a possibility of our New Zealand lamb and butter making a. special market for themselves, but it will be a difficult task to do so. and setting up the necessary distributing machinery will mean some years of hard work. If our primary products are to fetch lower prices, then this will mean lower wages for farm labour and smaller profits for the farmer. The inevitable result must follow of lower nrices for our secondary industries and reduced wages for their workers- The Labour leaders contend that if high wages arc maintained the purchasing power of i (he people will continue at a. high level, | the public, will be able to pay high i prices, and so long ns these high prices j continue the manufacturer and the 'distributor will come to no harm. UnI doubtedly there are advantages if high J prices and the consequent high wages \ could he maintained. Such n position t eases the burden of State and private ! indebtedness ; it takes less produce to meet payments of interest and principal. Unfortunately, however, (here is a radical weakness in this argument. New Zealand is not a self-contained community, producing all its own wants and not producing more than it. requires for its consumption. The primary industries depend upon foreign markets to absorb a large part of their output. The price obtained lor this part fixes the price for the home market and for the whole. I have shown I that England can only pay low prices ; for her imports, and that New Zealand j farmers will thus have to accept low 1 prices for their produce. Their purj chasing power will in turn become lim- ' ited, and hence our secondary industries must lower their prices to create j a. demand. Even if a high protective | tariff enabled the secondary industries j in New Zealand to meet the intense competition of the great manufacturing nations which, as I have shown, is inevitable, their sole market is New Zealand. If the great portion' of our community receives less money for their products, they will have less to spend. and hence prices must be cut. Personally I desire—and any thought | ful employer should desire—to see wages maintain eel at as high a standard as economically possible. At the same time we are at the beginning of au era of low prices. "Everywhere throughout the world prices have fallen, some products already are on the pre-war level, others are approaching to it. The con Burner everywhere has struck. Naturally his aim is not to buy until the bottom has been reached Everywhere the business man who thinks recognises the i position. There will be no groat reI vival of trade until prices of all proj duets ha ve reached a level which everyI one recognises will prove a, stable one. I Everyone is determined not to buy now if there i?. a. chance that in the future a fall in price v ill make the present purchase a loss. Take the houses erect-

ed recently by the municipal authorities and tho Government. Even with the present shortage of housing accommodation purchasers arc unwilling to pay a price equivalent to the actual cost of construction of these. They recognise the fact that in the near future a similar class of house will be obtainable for less than now. AY AGES MUST FALL. In face of this general fall in prices, money wages must fall. Employers* capital in a business can only withstand a certain amount of loss. Obtaining less money for their products, they must pay less money out. In the case oi: raos.t products wages represent the greater part of the cost of production. Hence the present rale of money wages cannot stand. T desire, however. to strongly emphasise this. Employers should endeavour to maintain the standard of real wages. The cost of living, as the .Government Statistician's figures show, is steadily coming down.. So long as tho. reduction in wages keeps pace with this—indeed, on a falling market it will always lag behind—-labour will lose nothing. T-t is (rue a man will have fewev coins, but those coins will purchase just as much. TO REDUCE PRICES AND AY AGES. CO XFER ENCE 11 ECO A 1 AIE N DED. (Pr.n PnKßs Association.) AYELLINGTON, November 16. 1 lie Employers’ Federation decided tc recommend the Government to call a conference of representatives ol financial institutions, shipping com panics, agricu Itu ra lists. um nnfa ctur ers. professional men and other bodie: early in the New Year, with, a view tt simultaneous reduction oi prices ano wages toward a normal stale, ajid thus avert short-time employment and trade stagnation. It was agreed to recommend the local association to secure meetings, of their various trade and affiliated bodies, iri order to appoint delegates to attend the conference to consider such reduction in prices and wages towards normal as would set the ’w heels of industry in full working order.