SOUND RECONSTRUCTION

Wanganui Chronicle, Volume 79, Issue 200, 27 August 1935, Page 8

SOUND RECONSTRUCTION

WILL BUILD ON SUCCESS MR FORBES DELIVERS P RE-SESSIONAL ADDRESS DEFENCE OF MEASURES TAKEN BY GOVERNMENT PROGRAMME FOR IMPROVING SOCIAL CONDITIONS ( Per Pi ess Association ) RANGIORA, Allg. 2b. A remarkable survey of the economic conditions faced by the Government during the last few years, and a vigorous defence of the measures taken to meet developments, were made by the Prime Minister, Hon. G. W. Forbes, in a pre-scssional speech delivered at Rangiora, in Mr. Forbes’ own electorate, to-night. Mr. Forbes claimed that results had proved that the Government’s policy had been the right one. as evidenced by the marked improvement in trade and business conditions in the Dominion. The sane and orthodox policy followed by the British National Government in restoring the Home Country to prosperity had many points in common with the policy adopted for the same purpose by the National Government in New Zealand. Mr. Forbes said that, having dealt with urgent measures of reconstruction, the Government intended to make a special effort in connection with the unemployment problem. The question of housing was receiving very careful attention. Also under examination were schemes for improving the social conditions of the people, including questions of social insurance, health insurance, and medical attention.

FUTURE PROGRESS NECESSARY STEPS TAKEN BY GOVERNMENT POLICY OF RECONSTRUCTION SUCCESS ACHIEVED EMERGING FROM DEPRESSION “Thg Government are, I t-iink, entitled to ciaim tnat taa necessary steps Have been taken to ensure the lUvine progress ot tnis Dominion on a sound I'jundation. To do this, we have obliged on many occasions to risk the gravest misunderstanding of our motives and intentions and to incur in many cases marked unpopu.arity, ” snd Mr. Forbes. “We emoaiKed on a policy of reconstruction ana oeiore very long we cou.d s-e that in tne normal tnree years 01 Parliament there would not be sufficient time to complete this process and with the programme as it porceeaed we could not iced, confident tnat tna most important measures tnat were required would have been put into effect. We accordingly extended the life of Parliament lor one year and when introduc-ng tins measure to Parliament I stated that when we appealed to the e.ectoxs we asked tnat we be given their sup port so as to enable us to take the necessary steps to meet the financial crisis winch had overtaken this country owing to the world dapression, and that support was given to us. We had found tnat three years was insufficient for the work, the liie of Parliament was extended accordingly, and you will agree that the time was fully occupied. “To drop the reins with an unlinisii’cd programme would have been disastrous. We preferred to extend the xiie of Parliament to enable us to p.oceed with our programme which, wnLc perhaps not entirely complete, will enable us to go a loug way to ciercome tne iutlatiouary effects of the boom period. Four years have now passed and the results of the Government measures cau be clearly seen emerging from the cuaos of the depression. Practically every sign at present is cue of encourugenic.it. There is a marked return of confidence and a general and thoroughly justifiable belief that our feet aic again firmly on the ladder to prosperity. We have already left the bottom rung behind us and are climbing steadily. A Consistent Policy. “A criticism frequently made is that the Government has no policy. I can only reply that in my opinion no Government has ever been so keen on evolving and consciously carrying out a consistent policy as the preset Government. “People speak of the depression in New Zealand as though it were the product of the Government, fcjurtly, every thinking man and woman knows that the depression affected the whole world and affected many countries be fore anil after it touched New Zealand. Certainly, we bad in our economy weak elements that were made apparent by the depression, but to blame the Government for having caused it is as futile as it is absurd. “Our policy has been to insulate New Zealand from the worst of the depression's effects and to strengthen tho«e elements which were weak of were endangering our whole economic structure. Because our economy is an agrarian one we have had to continue oar measures of agrarian legislation. “We have been blamed for introducing expeiim-ental measures. Yet it is the tradition of this country that bold measures should be adopted to meet an agent situation. I am confident that the future course of events will prove the policy that we have pin sued towards recovery was also right. Oddly enough another criticism is also made that we should go back to the Igislation of the 99’s. But critics must realise that conditions have en-

t’ucly changed and what was iigfrl in the DO’s is nut necessarily right in 1935. We are faced with this position that if our producers, upon whom the country depends, are brought to bankruptcy, then labour conditions in their turn will be brought to impossible levels. Unless we can maintain the financial stability of the Dominion and restore trade to a profitable level, then wages and our living standards will suffer anl the people’s savings will disappear. “me Government has been blamed for its interference with private enterprise. 1 admit that the Government nas rendered a great deal of assistance which in normal times would not have been necessary. This action is justified on the giounds of public welfare and not on sectional interests. The Government has no intention of abolishing private initiative or enterprise. Governments here and elsewhere have always imposed regulations on the inter-play of economic and social forces through social legislation, through tariffs and other commercial regulations. Every country has its particular agricultural, financial or industrial polity no matter how vaguelv understood generally or ill-defined, which through its Government it seeks more or less consciously to further. In the present time, however, action has to be more definite and vigorous because the old system has proved to have been incapable of meeting the present situation. “Large Net Out’’ “Critics and opponents of the Government are always apt to make rash promises and criticism that are very wide of the mark. It is comparatively easy for the party in opposition to uo this, and already a large net has Inen put out to catch all kinds of fish and h'u.s have been cast to which have been attached every conceivable kind of nook and bait ever invented as political lures. But the Government must necessarily be guided by a sense of responsibility in its promises. There can be no question of the Govern merit’s endeavouring to out-bid the promises of the opposition. ‘•Blaming the Government is not going to get us anywhere. The Government i; here for the purpose of encouraging industry and progress, thvugn evidently critics would nave you suppose that its aim is to hinder everyone. The general policy of the National Government in luture must be to maintain the confidence Which has now happily been restored, to create the conditions in which individual enterpiijse may flourish, and to supply where possible the means whereby it can be assisted and materially encouraged. That this can be achieved there is no doubt. The Government has faith in the people and hope in the future. The Government is also determined to maintain the freedom of the individual which has always been the outstanding characteristic of British democracy. “One point 1 wish to emphasise particularly—that at this time above all, when prosperity is obviously returning, it is essential that we should remain calm and steady. The people of this Dominion did not lose their heads during the depression. They realised, as did the people of the Old Land from which they sprang, that the times demanded Facriiices and drastic measures ui readjustment. For this purpose they adopted the wnolly commonsense view that was taken in the United Kingdom —that this was no time lor party reciiminatioas or for political manoeuvring. They welcomed the forma lion of a National Government in NewZealand, as a similar Government was welcomed in the united Kingdom. The excellent results in Great Britain arc obvious, and they are becoming required to consolidate the position of this country on as strong a basis as it ever has been. But if the people ot New Zealand are misled at this juncture, when success is in sight, by quack nostrums an 1 by fairy tales nf spurious short-cuts to UL**-Id wealth, then all that has been done may well be wrecked. Government's Intentions, “Now that we have dealt with the urgent measures of reconstruction—measures which are on the Statute Book and which are being put into operation so that, they may fulfil the intentions and policy nf (he Govern-

ment —we can now turn to consider what steps can be taken lor the improvement of the conditions of life of all sections of the community. We intend to make a special effort in connection with the uneniployniment problem lin the hope of putting it on to a sounder basis and we intend to take every possible step within our power to stimulate industry in order that a greater number of workers may be absorbed into the usual channels of employment. “So far as overseas trade is concerned we are paying special attention to improving the quality of our products and to exploring to the utmost every possibility of extending markets. As the country is aware, we have recently appointed a Trade Commissioner in Europe with headquarters at Brussels and another in the United States of America with headquarters at Los Angeles. As opportunity offers, it is our intention to extend this representation to enable us to take advantage of any improved international conditions and any relaxation of present trade restrictions that will enable us to widen our markets. “The question of housing is receiving our very careful attention and while in the United Kingdom the Minister of Finance and 1 devoted a considerable amount of time to investigating the remarkable progress that is being made there in this matter. We collected a great deal of information as to the action that is being taken by the Government and by the municipalities for improving the conditions in the cities and Mr. Packwood, an engineer of the Public Works Department, who is at present in the Old Country, has been detailed to make a special survey of the position and to collect all possible information, particularly as to the class of building that is being erected and the cost of construction. Social Insurance. “We have also under examination many suggested schemes for improving the social conditions of our people, including the questions of social insurance, health insurancee, and medical attention, together with many other matters for social betterment. “Looking lor a moment beyond our own borders, we find that international trade is at a low ebb. The value of world trade for the year 1929 was 68,641,000,000 gold dollars, while by .1933 it had fallen to 24,179,000,000 gold dollars, a contraction of 65 per cent. During the early part of .1934 the value was again falling but there seem to be some indications of an improvement. Until international trade becomes freer and less restricted by high tariffs, quotas, embargoes, and other hampering regulations it is, however, impossible to hope for a complete revival of international trade as we have known it in the past 1 , “Danger of World War.’* “From the political point of view again, the international situation is most difficult. 1 wish it were possible to state with complete confidence that 1 believe all to be well with the world. Unfortunately it must be obvious to any competent observer of events that all is very far from well. Indeed, it is perhaps not an exaggeration to say that there is more international suspicion and ill-will, and less guarantee of continued peace than at any time since 1914. 1 do not suggest that a disaster is in any way imminent or even probable, but it would be absurd to deny the fact that unless the nations of the world can find some better way than at present of discussing their mutual problems and of amicably settling their differences the world is by no means free from the danger of another catastrophe such as we experienced in .191418, though the very danger of the situation may itself produce its own solution. The position is an exceedingly ominous one and calls for the most earnest effort of every well-thinking individual even in such a remote community as New Zealand. “Last session I took the opportunity of laying before Parliament in a Ministerial statement a short .summary of the position as it was in February last, and since that time the position has become still more complicated and more difficult by reason of the dispute between Italy and Abyssinia, wnich threatens the very basis of the collective peace structure, based upon the League of Nations at Geneva. We, in New Zealand, remote as we are geographically, are definitely and directly concerned. A great many people feel horrified at the thought or war. 1 need hardly say that the Government share this feeling to the full, and the people of this Dominion can rely upon it that the Government will take every step within its power and will exert all its influence to prevent any war in future. “Ido not propose to elaborate upon the present threatening situation of the I controversy between Italy and Abyssinia further than to say that Great Britain has been foremost among all the nations in her endeavour to find a I eaceful solution. The situation i.ristles with difficulties; but there is every reason to be proud of the action that the British Government are taking and their most earnest, persistent and determined efforts in the interests of peace. In the face of very great difficulties the British Government have been steadily working towards a better understanding among the nations of the world and we can all join in the hope that, in the end their efforts will be successful.

Concluding Note of Optimism. “1 do not wish to conclude on a pessimistic note. 1 am definitely of opinion, and my sources of information are wick and varied, that New' Zealand has seer the worst of the depression. 1 an; saying this not because 1 wish to create any false feeling of optimism, 1 am saying it because 1 am convinced it is true. 1 think we may look forward with confidence to steadily inipro ng conditions and to better times and 1 know that when we have achieved them we in this small Dominion will be a bn- to look back with pride and with pleasure upon the manner in which we faced these apparent insuperable difficulties and finally overcame I hem. ’ ’

TRADE POSITION GENERAL IMPROVEMENT OUTLOOK FOR DOMINION BRIGHTER VALUE OF EXPORTS HIGHER GREATER BUSINESS ACTIVITY. The present overseas trade position was reviewed by the Prime Minister in his pre-sessional address to-night. In comparison with the last three years, he said, the position was much more favourable, both exports and imports being decidedly higher. The figures were:— Exports. Imports. £ (N.Z.) £ (N.Z.) 1932 35,610,000 24,646,000 1933 _... 41,006,000 25,581,000 1934 47,343,000 31,281,000 The excess of exports in the various years were:—l932, £10,964,000; 1933, £15,425,000; 1934, £16,062,000. The total external trade figures were: —1932, £60,256,000; 1933, £66,587,000; 1934, £78,624,000. “►Since the end of last year the trading position has continued to improve and the latest figures which have just been recorded are most satisfactory,” said Mr. Forbes. “The end of June is significant because it marks the end of the export season. The end of this trading year was, 1 believe, the brightest since the depression began, and I say this in spite of the fact that wool values were lower than they were in the previous export season. The value of wool, however, is again showing encouraging signs of improvement, and I think we may be confident of increased prices for the forthcoming clip. “In other respects the position was much brighter—exports of lamb, mutton and pork were higher both in quantity and in value than in 1933-34. “The figures for this and the previous years were as follows: 1933-34. 1934-35. £ £ Lamb 7,358,435 8,832,289 Mutton 1,389,709 1,905,414 Pork 950,183 1,313,502 “By way of contrast 1 will quote the corresponding figures for 1931-32—the middle of the depression; ' £ Lamb 6,275,383 Mutton „.... 1,575,477 Pork 246,045 “The importance of the increases of the last two years can readily be seen. The phenomenal increase in the value of pork is particularly gratifying. Butter Prices. “The price of New Zealand butter, 1 am pleased to note, are maintaining their upward tendency. New' Zealand butter is being quoted at 94s (sterling) per hundredweight. In July-August last year the price was 81s. New Zealand has now' supplanted Denmark as the largest supplier of butter to the British market, but with Australia also steadily creeping up. We must continue to use our best endeavours to make the New Zealand product superior in quality to any imported butter. “Turning to the trading position as a whole, we notice with the notable exception of wool, a general state of improvement. Exports are substantially above depression level ami the improvement in imports in very signifi“The value of exports for the year ended June 30, 1935, exceeded that of imports by £8,650,000. In the previous year exports exceeded the value of imports by £22,400,000. This very high balance was due to the unexpectedly high prices received for wool in 1933-34 and on the import side to the fact that the low slump levels still prevailed. The increase in the import trade during 1934-35, which almost reached 1930-31 level, has markedly reduced the visible balance of trade, but this, due as it is to greater purchasing power and demand in the Dominion, is a most encouraging sign. “►Summing up the trading position of the Dominion, we may say that the volume of exports is steadily increasing and thanks to price recovery total values are also increasing and have expanded considerably above the depression levels. “In other respects too there have been gratifying indications of recovery. Factory production figures, for example, show an increase of over £5,500,000 over 1933 and an increase in the number of persons engaged from 68,921 to Banking Figures. “The greatly improved condition of the bank figures provides a very striking indication of the upward trend in the country’s business. Bank returns always follow trade returns and automatically reveal trade movements. The latest figures indicate that a greater volume of business is being transacted by the banks. The volume of money now’ circulating in New Zealand as distinct from the volume of money lying idle is now' much larger than in the previous four years and it is still increasing. “The amount of free deposits as compared with fixed is still increasing. This is due in large measure to the improvement in business confidence leading to a desire on the part of depositors to hold greater sums of money in readily available form and also to an actual increase in business turnover. “Money has been plentiful and cheap during the past 12 months and only awaits the complete return of confidence and profitable avenues of investment. “Following upon the Unemployment Board’s amended scheme of building subsidies, building activity throughout the year has shown a definite increase. In the year 1934-35, 2173 building permits for private dwellings were issued. This compares most favourably with the figures for the two previous years which were 1981 ami 1062 respectively. “Another satisfactory feature of the past 18 months has been the definite improvement in the employment, situation. Unemployment. figures had

reached their peak in October, 1933, with a figure of 75,246. At the beginning of this month thdy stood at 57,571, a decrease of 4880 compared with the total a year ago when the figure stood at 62,451. “Another noticeable sign has been the increase in the number of people travelling overseas and in this country. During the year ended Marc*. 31, .1935, 12,924 tourists visited New’ Zealand. This is the highest total on record. National Finances. “As you are no doubt aware, the financial year ended with a surplus of approximately £1,600,000. National expenditure was £24,500,000 and revenue totalled £26,126,000. The increase in total taxation last year by £3,267,000 over 1933-34 is not the result of any increased rates of taxation—it is due entirely to the general improvement in tiade and business. It is also wortlq remembering that the total taxation includes some £1,500,000 a year of unemployment tax which is directly necessary for the relief of unemployment. The increase in this tax and in income tax is also a clear indication of the improvement in the national income. It is calculated that thd wages bill of the Dominion increased by £3,600,000 last year. Incomes other than wages showed an increase of more than £6,388,000, but it must be remembered that this figure is based on incomes earned in the year 1933-34 —the year of improved wool sales. Nevertheless, this total increase of £10,000,000 is a clear indication of better times. “Then again the increased customs and sales tax returns are another direct and certain reflection of increasing trade. Customs revenue for the financial year 1933-34 was £6,485,000 —for last year it was £7,424,000. The latest available figures (for the first half of the calendar year) as compared with the same period in 1934 show that this increase is being continued. For the half year, January-June 1934, customs receipts were £3,38(5,892. For the half year, January-June 1935, they were £3,681,599. “The same position is disclosed in respect of the sales tax which is based directly upon the volume and value of wholesale business in New Zealand. The sales tax returns increased from £1,847,000 in 1933-34 to £2,170,500 in 1934-35. The half-yearly figures (Janu-ary-June) are 1934, £988,121; 1935, £1,131,465. Optimism in Place of Gloom. “The undoubted increase in general confidence is, of course, even more important than these figures. Summingup, I think I may claim to have produced evidence of general restoration. Indeed, you have only to look around to see the clearest indication on every side. Certainly there is a striking change in the general attitude towards national conditions. There is now a pronounced spirit of optimism in the place of gloom, and prospects are undoubtedly better than at any time since the depression began. Export values have improved, imports have increased, the balance of trade is favourable, costs of production have been reduced, and money is available in abundant quantities. “It is usual for the policies of Governments to attract more attention than the efforts of private individuals, but in the aggregate the latter are more important. Throughout the depression in New Zealand the processes of individual adjustment which have been pursued have been leading the country into a healthier economic organisation. Great sacrifices have been made by the community but these sacrifices have not been in vain and it is impossible to believe that any policy that would have ignored the fall in national income would not have increased the difficulties of the country. 'Fhe Government itself has pursued a policy of drastic economy in public expenditure in just the same way as the public has had to economise in its private expenditure and it rests now largely with private enterprise to build up the foundation that has been laid. ’’

FIELD OF RESEARCH REMARKABLE PROGRESS IN BRITAIN MR. FORBES’ OBSERVATIONS TRENDS IN USE OF WOOL In his capacity as Minister For Scientific and Industrial Research, the Prime Minister. Hon. G. W. Forbes, took every available opportunity while in Great Britain of investigating the really remarkable progress that has been made in the research fields which bear directly upon New Zealand’s trade and industry. “Mv conviction of the importance of technical progress to the present and future position of the Dominion was immensely strengthened by these observations,’’ said Mr. I Forbes. “In this time of intensive competition much depends upon the ability to produce the highest quality material at the lowest possible cost. Research is consantly evolving new ideas and methods for which New Zealand must be prepared and adequately equipped to try out, and we are in actual fact keeping abreast of al] such improvements. “Because of its importance to New Zealand andzTrom my own experience as a farmer, 1 was particularly interested to find out the trends in regard to the use of wool ami I had interest ing conversations with the British Wool Federation. I also visited the Research Station at Leeds and a large artificial silk factory at Derby, and to give some idea of the latter I may mention that 15,000 hands were employed. I visited a most efficient and progressive top-making plant originally built as a result of the initiative of Messrs. A. Sims and A. Cooper, whose names stand high in New Zealand circles. A large amount of New Zealand wool was being put through this plant. “It is asuredly only too true that our crossbred wools are suffering from the competition of artificial fibres ami I was told by an official of the Briiish Wool Federation that more than 100,000 bales of crossbred wool have been replaced by artificial fibres, in one avenue alone: consequently it is necessary for us to be on the watch to improve our wool from the point of view of manufacturers’ requirements i

1 DID NO HOUSEWORK FOR SIX MONTHS ’ KEPT IN BED WITH RHEUMATISM “UP A XI) DOING” AFTER TAKING KRUSCHEN. Knees swollen—neck stiff’ with pain—unable to get out of bed. That was the condition of this woman when she began to take Krusehen Salts. Now she writes this letter: “I have had rheumatism in the neck and knees for years, and have been bedfast lor several months. 1 could ger no relief from anything I took. Then a frier.n of mine told me to try Kruschen Salts I got a bottle, and that first bottle took the swelling out of my knees. Soon my neck too was free from pain. It is three months since I started taking Kruschen, and now I am 1 up and doing my housework—which I could not do for six months. I felt it was my duty to lot you know this. I would not be without Kruschen now.” —(Mrs.) F.S. Most rheumatic pain and swelling is caused by too much uric acid in the body. Uric acid is composed of sharp, needle-like crystals which settle in the muscles, joints, and tendons, pierce the nerves, and inflame the tissues. Keep down the excess of uric acid from day to day, ami it stands to reason you ’ll never have to suffer any more. That is just what Kruschen Salts does —brings quick relief from the cutting, stabbing pains of rheumatism because it actually rids your blood of every trace of poisonous uric acid. Two of the ingredients of Kruschen Salts dull the sharp edges of these uric acid crystals, thep dissolve them away altogether. Other ingredients of these salts assist Nature to wash out these dissolved crystals through the natural channels. And as they go, there’s no doubt about those aches and pains going too! Kruschen Salts is obtainable at all Chemists ami Stores at 2/6 per bottle. and to assist in the search for new avenues of utilisation of wool. I was pleased to find how this threatened competition with artificial fibres had stimulated activity in the better processing of wool and there is no doubt that astonishing strides have been made in better processing to render it unshrinkable and to improve the bleaching, dyeing and finishing. This work is already tending to increase the use of wool. We need to exploit those qualities of wool which are not easily imitated because the United Kingdom alone is now producing over 100,000,- | 0001 bs. of artificial silk and the quantity is steadily increasing. 1 was told that New Zealand is importing about £700,000 worth. All fibres are definitely or indirectly in competition with each other. On the whole I gained the definite impression that there was a distinct revival of the demand for our wool in the United Kingdom but we need to take the whole problem seriously. It was interesting to note the developments of new uses for New Zealand wool, particularly in regard to motor car upholstery. “I was interested to discuss with the British Wool Federation the use of woolpacks, made from our Phormium flax, and, as a result, they are making every effort to help us in New Zealand to make a pack which will be superior to the packs which are at present used, and to pay for which we send so much money out of the counStorage of I'ooodstuffs. The Low Temperature Research Station is a station run by the British Research Department under the chairmanship of Lord Rutherford. It is concerned with the storage and transport of foodstuffs; the work being mainly carried out at Cambridge. Among the spectatcular results demonstrated to me, was the work on export of chilled beef. It is pleasing to note that the first shipment from overseas of chilled beef under gas storage was carried out in co-operation with our own officers. The work of thijj research station has also had profound effect on the storage of fruit in artificial gas atmospheres. These developments cannot but be of profound significance to New Zealand and we need to be ready to exploit the advantages offered. Even iu connection with chilled beef, on a quota of 66,000 cwts. per half-year the increased value to us of chilled as compared with frozen beef is at least £60,000 p.a. J was interested to sec the experiments on New Zealand pork which have leu to practical application in that the highest quality bacon can be made from our New Zealand baconers and this has stimulated the demand for our produce. There appears no doubt that the type of perk fed on our dairy byproducts is of a quality very accepttable to Britain. The export trade has grown from practically nothing six years ago to £1,250,000 worth. Full Research. I was also very impressed with the work of the Fuel Research Station. During the past few years we in New Zealand have made our solves almost independent of outside sources of coal, but we still have to import nil our oil. The problem of unemployment in the coal industry has been much more acute in Great Britain than here in New Zealand, owing to diminution of exports and there has been a great effort to increase the use of coal for the production of oil, with the object of saving imports and from a defence point of view. As a result of these efforts and of the work of the Imperial chemical industries a fair proportion of Britain’s supplies of petrol will be produced from coal by a process called hydrogenation, or a combination of hydrogenation with carbonisation along the lines practised by gas works. This question insofar as it relates to New Zealand is being carefully enquired into, so that, at the appropriate time, developments may be encouraged. I took the opportunity of discussing the problem with the experts of oil companies, and have arranged for a constant watch on developments. I am discussing with my colleagues the appropriate action to be taken in New Zealand and so that we may definitely be able to produce some of our oil requirements in the country. I have not the time on this occasion to mention further the many other important visits. However, I took the opportunity also of discussing the work and the practical and administrative value of these particular stations from the New Zealand point of view with Lord Rutherford, Sir David Chadwick ar.d many other eminent research directors ami workers.’’

DIFFICULT PERIOD

EVENTS OF LAST FEW YEARS GOVERNMENT’S RECORD MEETING THE PROBLEMS Mr. Forbes reviewed the events of the last few years, one of the most difficult and perilous periods that the Dominion had experienced, and showed the magnitude of the problems faced and explained the steps that had been taken to meet the position as it developed. By August, 1931, a etale of national emergency had arisen, as a consequence of which the National Government was formed. Wool had fallen on an average from 15d in 192!) to 6d per pound in 1931. Butterfat had fallen from 160 s per cwt in 1929 to 107 s per cwt in 1931. Lamb had fallen from 73s per cwt in .1929 to ! 53s (id per cwt in 1931. Mutton had fallen from 40s 6d per cwt in 1929 to 27s per cwt in 1931. For the year 1928-29 the total value of New Zealand production at wholesale prices was estimated at £127,000.000. In .1931-32 the total had fallen to £84,000,000. Export values had dropped from £56,000,000 in 1929 to £35,000,000 in 1931, a drop of nearly 40 per cent. Imports had dropped from £49,000,000 in 1929 to £25,000,000 in 1931, a fall of over 50 per cent. Impossible Position Primary producers were placed in , a completely impossible position. The 1 cost of producing their goods was much the same as it had been, but the return that they were getting for them was reduced by some 40 per cent, and their business was being carried, on at a heavy loss. There was the undeniable prospect of wholesale abandonment of farm s and complete stoppage of business. Shrinkage in the farmers’ purchasing power was not only reflected in reduced demand for the goods of importers, traders and local manufacturers, but it also weakened the security of mortgagees and embarrassed financial institutions. Accentuating I the effects of low prices were the relatively high costs of production, including interest rates, wages, ano other outgoings. Obviously this position could not be expected to last and obviously something had to be done to enable farmers to continue to produce. “I have always regarded the prim ary industries as the foundation upoi. which all our other industries rest, and if we impair this foundation it is obvious that there is a danger of whole sale collapse. On the other hand, if wq strengthen the foundation we d<i something which will ensure the safety of the whole industrial struc-

ture,” said Mr. Forbes* “The assertion that we have extended a disproportionate amount of assistance to the primary industries as compared with other sections of the community is a very short-sighted view. Any assistance rendered to the primary industries is in the truest and the most real sense of the word assistance rendered to everybody in the country. Moreover, we have been helping an industry, not individual farmers. Increased Production “When primary producers found that they were getting less for the quantity of produce they had 1 een accustomed to sell they at once and naturally came to the conclusion that to keep up their income they must produce more. This was done very successfully in New Zealand, but unfortunately it was done successfully in very many other places, and the result has been that so much has been placed on the markets of the world that the extra quantity has not led, as was hoped and believed, to extra returns. Indeed, we find the anomalous position that in many cases the more one produces the less one gets, and that the very step that was everywhere taken to meet the situation smiply had the effect of making it worse. Tt soon became apparent that a mere increase in production was not going to solve the difficulty and it was equally apparent that the problem as a whole could not be solved by anything done in New Zealand. The problem of falling price?, intensified by monetary difficulties, by a general loss of confidence, and by increased economic nationalism, was a world-wide problem and all that we in New Zealand could do was to make the best arrangements possible within our own borders to mitigate hardships and to reduce our expenditure to the utmost possible degree. “Now that is a short picture of the position which had developed and which had to be faced by the new , National Government. 1 do not sug- ! gest for a moment that the Government saw any effective solution of these problems. I. do not even suggest that the Government has made no mistakes, but no modern Government can afford to sit hack and hope that the traditional policy of letting events look after themselves will carry them through. We have only to look around •it other countries to realise that no Government anywhere has been able to avoid taking unprecedented steps to moot the position. “Faced with the set of facts that I have outlined, the Government was obliged to do something, and the New Zealand Government has done, i.s very utmost, in most difficult and perplex ing circumstauces, to equalise the burden all round, to take what .-tens ware possib’e tG minimise the worst of the hardships, to propose what measures appeared likely to effect an improvement, and to take hold of a .antic;.al disaster in a national way. In doing this it has had to do many unpopular things and it ha* never shirked doing them. “A Doctor’s Mandate” “The fust step of the National Government was to go to the country to explain that New Zealand was facing something quite new in the memory of living man and to ask io? what was commonly referred to at the time as ‘a doctor’s mandate.’ In other words we said: ‘The country is in grave trouble. It looks likely’ to be worse before it is better. We have no definite proposals to make at the moment, but we have the interests of ail sections of the community at heart. We cannot let things drift or national bankruptcy will be on us. Give us your authornty to deal with the situation as we think best. Give us sufficient time to do the very difficult job that is in front of us, and judge us by the results.’ ” In the election of 1931 the Coalition Party was returned with a working majority and Mr. Forbes proceeded to give an account of the steps that had been taken and their effect. Special unemployment taxation was necessary, Budget equilibrium was achieved, although, of course, this meant increasing taxation, economies were effected, borrowing curtailed and the primary industries assisted by the Mortgages Relief Act prohibiting foreclosures on mortgagors and by the raising of the exchange rate. Furthermore, the National Expenditure Adjustment Act, of 1932, made provision for a reduction of all rents and interest, by 20 per cent. Adjusting Values I’he legislation of 1931 and succeed ing years had provided a useful measure of temporary relief for mortga gors. Contractural obligations were revised generally on a voluntary basis, where necessary the Court had stepped I in. But it. must be realised that, these measures were temporary expedients. 11 was firmly believed that prices would rise again and all would be well, but prices had not returned to the level of 192!' —ami there seemed no prospect of their doing so—indeed they were nearer on the average to pre-war levels. It was obvious, therefore, that on the basis of present-day value* I agrieultoral lau<l was over capitalised | and that adjustments must, be made to present-day levels. At. present prices it. was impossible to earn a profit on old capital values the burden of the old debt weighed too heavily. Apart from the normal course of bankruptcy, some form of reduction was necessary. This ha<| been generally recognised. and naturally the investor had preferred not to invest further on the land, bill Io pul his money on fixed deposit, un til the. process of reduction should be complete. Tt was obvious that unh existing debt charges wore reduced to a point where profits emerged again, no new investment in agrieultlire would 1 lake place. This feeling of uncei lainty had therefore to be removed. We wore laced with this posilion—too much money at present invested in land and at too high a rate of interest. It. was necessary to obtain 4»***®4)pr money to replace. the old.

Judging by the bank return, money was abundant and cheap, but the investor was unwilling to lend. Therefore, because there was little hope of a return to high prices, the Govern meat introduced measures to end tms deadlock. It was hoped that the r? cent scheme of reconstruction would not only place farm industries back on a sounder basis, but will restore collidenco in farm securities and generally react to the benefit of the whole community. Mortgage Law The result of the Government s action Was seen in two measures passed by Parliament last session, One provided for the amalgamation of the principal agricultural mortgage activities under a National Mortgage Corporation. In at least two respects important benefits should result —agricultural finance would be obtainable nt lower rates than at present and the wider acceptance of the amortizatio t principle would enable mortgages eventually to be paid off and not merely renewed as had been the custom in the past. The Rural Mortgagors Final Adjust inent Act was an attempt, to solve the problem, of excessive capital liability. This measure provided that no com potent farmer, who because of the de pression was unable to pay his debt would be put off his properly. Il provided further that for a period hr should work with his income so allo cat cd as to give him reasonable Jiving ami working expenses—the remaindei to go to hi s creditors. At the end ol the period the property was to la valued mainly on its earning capacity to determine what amount, of debt it could carry. The rest of Ihe debt would be written off. The Act also provided that mortgagees would not be treated unjustly ami the Court of Re view would see that justice was ac corded to both parties. ‘‘l entirely appreciate the criticism that has been raised in many quarter* that this measure involved a distinct departure from the tradition of th* past that contracts freely entered inishould be inviolate,” said Mr. Forbes I •’! am tho last to suggest any un I necessary interference with the sane lily of contracts, but. I am bound t< point out that the position as it, de \ eloped had become absolutely un possible ami that, the steps we have taken, though novel, are by no meanunique. Similar expedients have been resorted to by practically every farm ing country i:i the world, and to an lexical, even greater than in Nuw Zea ' I.iml II has been contended that mat I levs could have been straightened out under the normal procedure of fore closure and bankruptcy, but thi course would clearly be disastrous. It would have, involved so many am' would have led to such chao s that m Government could ha.o allowed it.' 1