MEETING THE MARKET

Waikato Times, Volume 94, Issue 14585, 7 February 1921, Page 7

MEETING THE MARKET

AMERICAN BANKER'S VIEW. BUYERS' SHARE IN BUSINESS. CONFIDENCE ESSENTIAL. The need for restoring the confidence of the consuming public was the theme of an adress delivered by Mr Roger H. Williams, vice-president of the National Bank of Commerce in New York on December 14. He declared that public refusal to buy has been carried to the point of false economy, and normal buying must he resumed to prevent a possible combination of high prices with lowwages and unemployment. Business needs to regain public confidence by exacting smaller profits and even by accepting losses. "To my mind there Is no greater Hervice than can be rendered to business and lo the public than to reestablish a normal volume of buying," Mr Williams asserted. "And to do thjs business and the puhlic must come to an understanding. It is no time to preach thriftlessness ,but it is a time to place emphasis on the need for sanity in buying . It, is not thrifty to stop buying altogether any more than it Is thrifty to consume all of our current production without consideration of the future. That is a wasteful way of doing business. It means extravagant production costs and waste of materials in the boom period, and in the period of depression It means deterioration of goods not consumed. In both periods, therefore, It means great waste of human endeavour —and in the last analysis, the public pays the bill. Risk of a Reaction. "There are a number of more direct and obvious ways in which this restraint of buying is inflicting injury. Win. goods flooding hack on their hands, producers and distributors have had to make abrupt curtailments of their activities, resulting in unemployment, and in many directions in drastic wage cuts. Not only are manufacturers and- distributors injured, but misfortune visits the working class with its resultant .discontent and unsettlement. A recession in buying carried ton far and producing too great a stagnation in production may result in a secondary era of shortages and a rebound in prices without an increase in real wages to meet it. "But as business men we niust not be blind to the fact that the real initial remedy lies with business itself ■ —lies, in other words, with the chief sufferer in the present misfortune. What will help to restore this normal scale of buying which we all recognise ,is necessary to keen the streams of trade flowing? For one thing, dispelling the feeling of distrust, prevalent in the minds of purchasers that some business men are still demanding too much for their wares. This distrust in some eases amounts almost to resentment that business is not keeping good faith with its public. Revolt of the Buyer. "A good argument, can be put up for passing the losses of a declining market to the ultimate consumer, so long as he keeps buying, since this spreads the loss most thinly and widely. But when ttie ultimate consumer revolts and stops buying the wise merchant in such case will meet, the market and lower his price levels. This is not only sound business, but good sporting spirit, which the American puhlic likes to honour. "The public knows that many business men made excessive profits in the era of extravagant public buying by being able to unload accumulated stocks bought at low prices. Is it too much to say that it was the duty of such business men to exercise foresight and accumulate surpluses to absorb losses incident to a period of dropping prices? If the full toll of high prices was exacted on goods luckily bought .or cheaply produced, is it not fair play that out of those unearned profits should be assumed some of the loss from low prices on goods bought at higher levels? When the public' becomes convinced that business is giving it the advantage of falling prices just as readily as it took advantage of rising prices, public confidence will be reassured, and buying stimulated. A Debt to the Public. "Again, it is a part of the education which business owes to the public to demonstrate that goods are being produced at the least possible cost compatible witli the prices of materials and labour. Business owes it lo the public to be efficient, and to give it the benefit of that efficiency. The public is inclined to distrust that business has become too used to excessive profits, and is, therefore, not willing to pass along products on a reasonable margin of profit. Ido not believe that business is exacting exorbitant profits, but. at the same time it is my feeling that the public is not vet convinced of this view. There iias been some damage clone to the progress of readjustment by highlyadvertised reduced price sales, in which prices were not sincerely reduced. • , . "There is one more important thing," Mr Williams added, "and that Is that growing unempl . ment and lowered wages have created a fear on Hie part of many thai their buying power is going to be drastically reduced They are struggling to get along with their old belongings rather than to buy new ones, apprehensive that later on they will need every cent th'ev can save in order to make sure of obtaining life's necessaries. It will very materially aid the orderly readjustment now under way if business' sees lo it that a reasonable relation is maintained between the reduction in the buying power of ttie wage group and the reduction in the high cost of living. Maintaining real wages means promoting Hie general prosperity which effects us all. The wage-earn-ing public will not contentedly accept a lower scale of living than it has become used to."