The Waikato Times With which is Incorporated The Waikato Argus. MONDAY, DECEMBER 1, 1924. WHEAT AND WORLD PRICES

Waikato Times, Volume 98, Issue 16153, 1 December 1924, Page 4

The Waikato Times With which is Incorporated The Waikato Argus. MONDAY, DECEMBER 1, 1924. WHEAT AND WORLD PRICES

The statement that there is an estimated world shortage of wheat amounting to 401,000,001) bushels is not cheering news for New Zealand, in view of the fact that we are not producing sufficient for our requirements. It is probable that wheat will reach a very high price, for the shortage is taking place} at a timewhen prices ar6 rising. It is remarkable that wheat prices should rise when wool prices are unusually high, and it shows that the shortage of these lines is not the only factor in the rise. The policy of the financial magnates in America is largely responsible for recent economic movements. The United States is suffering from a plethora of gold. Their high tariff hindered the importation of goods, and in consequence debts due by merchants in foreign countries were largely paid in gold, and in addition Britain is paying a huge war debt, again partly in gold. The bankers in America were afraid that all this gold coming into the country would raise prices, and hence they limited credit strictly and buried gold in the bank vaults in Washington. The tariff prevented importation, and foreign countries could therefore buy less from America. The restrictions on credit kept local prices low, and farmers in the wheat regions suffered severely. When the time for the Presidential election approached, there were fears that the farmers might desert the Republican Party, for which they had been accustomed to vote, and support Mr La Follclte, whose especial bugbear is the financial trusts. In order to improve the Republican chances, the hold whi-a had teen kept on credit was relaxed, and prices began to move up, and at the same time the prospect of a shortage : in wheat was discerned and naturally prices rose greatly. The shortage has now been confirmed from Rome, where an International Commission has been in existence for many years, and is the great authority on the world's yield of wheat. The credit restrictions have apparently not been re-imposed, and probably it would be very difficult to do so. The boom which has taken place on the New York Stock Exchange points to an immense amount of money available, and easy terms of credit. Interest rates for short loans in New York have been lower than in London, and in consequence a certain amount of. money has been sent from the United States for investment, and has helped to raise the exchange value of sterling. The speculation in New York has continued, and looks likely to reach a height that means trouble. It is precisely this speculation which the bankers feared, and tried to pre-

vent by restricting credit. It was obvious, however, that they oould not do so for ever, and equally obvious that when the gold was allowed out it must raise prices. Stock Exchange prices are hot of great importance, but It is a serious matter if the price of commodities, and the rates of wages rise. It is, however, tolerably certain, and the point which interests the outside world is whether it will reach a height that permits of importation in spite of the exorbitant tariff that exists. The Americans have bought our wool, in spite of a duty of one shilling and fourpence per lb on it. and they may come to buy our butter and pay the duty of fourpence per lb which they impose. The lot of the American farmer should be good, but in practice it is found that the duties have raised prices against him, and he has to pay away the extra money received. A more serious matter is the lessened area of wheat, which was brought about in the United States by the low price which in turn was due to restricted credit and the prevention of imports. Now we find that there is a world shortage, just as there was a world shortage of wool. Fortunately the lack of wheat can be repaired much more quickly than the lack of wool; for wheat from some country or another is always coming into the market. Our own requirements, however, are likely to be filled at a high \ price. Wheat growers in New Zealand would probably resent any proposal to abolish the duty, but there is no question that they would be better without. It tempts men to grow wheat on land that would be better used for other purposes, and if the wheat has to be exported, our distance from the market is so great that there is little profit in the business. If the duty were abolished wheat would be grown where conditions were suitable. We do not know whether wheat-growers have a bureau where statistics of the area to be sown in wheat and other crops is ascertained and tabulated for information, but if no such institution is in existence, it should certainly be formed. It could be run at small expense, and would prevent many risks. The uncertainties of the weather we cannot guard against in our present stage of development, but the risks of the market could largely be eliminated. The rise in the price of food and raw material will be followed later by improved trade"' in the industrial countries, and Britain should be in a posi-' tion to profit by this. Already there has been a rise in freights due to demand for wheat cargoes; this will improve shipbuilding, which creates a demand for steel and coal. Reparations and international debts have stood in the way of any revival of trade, and will do so until they are abandoned. In spite of them some openings for trade exist, and the outlook is better than it was. We in New Zealand have had little to complain of compared to people in Europe. Nevertheless, there is room for improvement here, and some signs that improvement is at hand, if a mistaken financial policy does not prevent our enjoying it.