Wairarapa Daily Times [Established Over 50 Years.] THURSDAY, MAY 24, 1928. PRODUCTION AND PRICES.

Wairarapa Daily Times, 24 May 1928, Page 4

Wairarapa Daily Times [Established Over 50 Years.] THURSDAY, MAY 24, 1928. PRODUCTION AND PRICES.

+ Can we get back to the prices of 1914? If so, should we make an attempt? The course of history, even that of the past 150 years, has shown so many fluctuations in the leevl of prices that now, as always, it is not safe to prophesy. History informs us of some of the conditions precedent to the return, and from a knowledge of the conditions which have brought about the fluctuations in the past we may form a judgment of the likelihood of a return to the level in a broad sense of 1914. One country alone could not of itself get back to the 1914 price level. Commerce is international now more than ever. Prices, excepting those of a very few commodities, are on a world basis. In particular countries prices are influenced by tariffs and by freights, but making allowances for such factors the prices of most commodities move in the same way in all civilised lands. The exceptions are the prices of commodities which do not carry well, if at all. from one country to another. In those cases local prices rule. To-day a general downward movement in pri-

ees would come about by a decline in the supply of gold for monetary purposes. All Western countries, or countries linked with the West, as well as Japan and India, are back to the gold standard, are linked with gold, or have relatively stable currencies. If the supply of gold for currency purposes decreased there would be a restriction of credit, and with less credit prices would fall. That, baldly, perhaps crudely, stated is the manned in which a fall would now occur; nor would it occur suddenly and steeply, unless the diminution in gold supply and of consecpient credit synchronised with the end of a boom period. It may be argued that conditions were better in 1914 than at present, therefore conditions would improve if we could get back to 1914. We are not as we are because the prices of to-day are so much higher than those of 1914, but because of the events which brought about other conditions, as well as the rise in prices. It is well, too, to count the cost of an attempt to get hack. Falling prices are accompanied by dragging business, by business failures, and by unemployment. Goods purchased on credit do not realise their purchase price. Wages have to be reduced to meet the fall in prices, but meanwhile the fall in wages' lags behind the'fall in prices. Production languishes because business as far as possible lives on accumulated stocks. So unemployment grows. In this way wages are forced down proportionately to the level of prices. Both employer and .employee suffer. The cost in our public finance, too, would be high. New Zealand is a debtor country. The money is borrowed over long terms. A fall in prices would mean that more of the commodities which are exported would be required to pay for the interest we owe oversea.