THE Wairarapa Age MORNING DAILY. WEDNESDAY, OCTOBER 1, 1930. PRICES AND COSTS.

Wairarapa Age, 1 October 1930, Page 4

THE Wairarapa Age MORNING DAILY. WEDNESDAY, OCTOBER 1, 1930. PRICES AND COSTS.

In an instructive ' survey of the present economic outlook, at the annual meeting of the W.F.C-A. Ltd. yesterday, the chairman of directors (Mr. C. M, Bowden) showed clearly how very necessary it is that production costs in this country should be brought into conformity with a lower range of world prices. The observations reported in our news columns today were 'based, upon a detailed examination and comparison of the prices obtained for New Zealand staple commodities over a series of years. Mr. Bowden showed that while the fall in prices last year wias sharp, oversea commodity prices have on the whole been falling steadily- over a period of years. His conclusion that we must adjust ourselves to world conditions is one from which there appears to be no escape. A memorandum on production and trade compiled by the economic. and financial section of the League of Nations offers in explanation of the present level of world prices the fact that while the population of the world has increased by ten ]ter cent, since 1913, the world production of foodstuffs and raw materials was in 1928 greater 'by 25 per cent, than before the war. “.The memorandum offers a natural explanation of the fall in prices—namely, an increased supply,’’ the city editor of the London “Times” wrote recently. It was true, he added, that wholesale prices had fallen from, an index number of 320 in April, 1920, to 113, but they had risen from 100 in 19T3. “War created the scarcity and resultant high prices, but if there had Ibeen no war the 1913 trend, of prices might have been continued and brought prices _, slowly up to their present level. ... As the primary cause of the fall in prices is a greater abundance of commodities;* there is no reason why the community generally <

should view the decline pessimistically. Producers have the difficult task of redheing costs to the new level of prices. . , This states the position in a nutshell arid naturally it is not regarded in quite the same light in a producing country like this as it is by city men in London. Tn this country the welfare and prosperity of the whole population 1 depends upon th» ability of producers to reconcile their costs with the new Ibvot of prices. Mr. Bowden clearly was right in this citation yesterday of four factors that would speedily reduce the cost of living, 'Stimulate industry and provide work in New Zealand. The four factors were lower money wages,, lower taxation (to be 1 made possible by reducing the cost of government and of social ,service.'’-), lower transport costs and a further adjustment of the prices of land. How far Mr. Bowden’s dictum 4>hat “It is aMtnitted that wages and salaries should be the last thing to fall—every other reduction should bo made first” is capable of being reaiisfed, time and events must show. The difficulty to-be' overcome- in endeavouring 1 to pursue such -a policy is that wages enter so Hu-gely into all other costs. In a measure, the fall' in prices has been, met by increased production and in the extent to which production can be further increased at moderate cost, the whole position will be easrid, but more than this is needed. New Zes land is working on a higher level of production costs than can be reconciled with even a fairly optimistic estimate of the level at which world prices are likely to stabilise and in one way or another the position must be adjusted.