WINNING THROUGH.

Waipa Post, Volume XIX, Issue 1076, 12 April 1921, Page 6

WINNING THROUGH.

MR YOUNG 3LP., ON THE MONEY PINCH. CAUSES AND THE CURE. SPEECH AT TH'E FLOWER SHOW. The financial cloud was the chief topic in the speech in which Mr J. A. Young, M.P., opened .the Te Awamutu Horticultural Show on Saturday. After congratulating the society on the show’s excellence, tracing its origin hack to Mr J. B. Vause, a former postmaster here, and saying the quality of the exhibits proved the high productiveness of the soil. Mr Young said he wished at this opportunity to speak of the financial stress, of which they had read much in the newspapers of late. Many people were anxiously concerned about the future, and a number of- causes were operating, but the main cause was the low price being now realised by the farmers for their produce. Waikato was fortunate because its chief product was butter, which, with other dairy products, was realising good prices. On the contrary the producers of wool, store cattle, and meat were in a bad way owing to the very low prices. The farmer in any branch of production was the foundation of the Country’s economic structure. When he realised high prices for his exported surplus the whole country prospered because he circulated that money and set going a wave of enterprise spreading in all directions. Then employers could employ more labour and pay the best of wages. Thus it was for the general community to encourage the farmer to produca and for the Government to see he was enabled to sell at the best advantage overseas. New Zealand’s money came chiefly through London, and when London owed us less than we owed to her, then we were in a bad way in the matter of finance. Now a position had been brought about in this country relating to what was called the moratorium in connection with deposits made at call and short date with trading .firms, principally companies. That did not apply to banks, as had been erroneously reported. Private firms had invited the public to make deposits with them at high Tates of interest —up to 7 per cent.—and it was of the most serious importance in the emergency which had developed that depositor’s money be protected as well as the credit of the firms concerned. It must be remembered that during the war period great difficulty was experienced -n getting supplies, and trading firms therefore who required, say, 50 dozen goods got into the habit of ordering 100 dozen, and then probably received only 40. At that time New Zealand produce was- being sold overseas on the credit guaranteed by the British Government. But now this had ended. We could now sell only on the power of the people abroad to pay, and at the same time in Britain there had been greater revival in production than the purchasing customers could keep up with. The continental countries were too poor to buy from Britain their customary quantities. The result was that the British warehouses became rapidly overstocked and the goods originally ordered by New Zealand traders ’had now unexpectedly come to hand, while the New- Zealand warehouses too were now overstocked. These had to be paid for by the merchants. who in turn had to borrow money from the banks by way of overdrafts, until the banks declined further assistance. Then many merchants adopted the method of inviting the public to make deposits with them for short periods and at call, at high rate of interest. Now, here was the position. The Government had been accused of protecting the big men at the expense of the little men, but Tie fact was that the protection was vitally necessary because it was obvious that ■the merchants did not keep these deposits idle in their safes but used them to purchase goods, and if the depositors in large numbers made a run on these companies and demanded payment and the companies were not protected by the moratorium there would have resulted a financial crash throughout New Zealand from end to end in which the small depositor would go down with the merchant. The remedy was to make up our minds to work hard to see the difficulty through and cut out waste and luxury; speculation—in land, stocks, dress, everything. Then we would win through. This country was going to come out all right, better than any other because it was one of the most productive little countries in the world. While this district could produce goods like those he saw at this show they need have no fear for Te Awamutu. He wished the show a very successful future.