FACTORS IN COSTS.

Waikato Times, Volume 112, Issue 18796, 18 November 1932, Page 10

FACTORS IN COSTS.

INTEREST AND WAGES. ADDRESS AT PALMERSTON NORTH. Stating that he was endeavouring to put things in the light In which he noticed the average man in the street did not see them, Mr Herman Seifert addressed the Citizens’ Lunch Club at Palmerston North on the questions. of interest, wages and costs. Interest and wages were the only Iwo ingredients of costs, stated the speaker. The reduction of costs therefore meant the reduction in interest or wages, or of tooth. If one was receiving more than a fair share it seemed fair that it should be reduced to bring both into harmony. If they were in -harmony and it was still necessary to reduce costs, then both shkuld suffer a reduction in proportion to the recompense earned. It was not practicable for any business to divide its costs under -the two headings, because of the allied factors which had to toe 'taken into consideration. Any reduction should be general or someone would receive an unfair advantage, and much dissatisfaction would result.

“Although cost is composed of wages and interest,” added the speaker, “nothing can he earned by either until put to work. If both money and labour are not used prudently, then failure is certain and money is lost; somebody’s savings have gone and the world is no better off, because the savings toad been used to produce something of less value than the average saving. If the savings of people find their way into the hands of others who do not use them prudently, and are lost as a consequence, capital, to that extent is wasted and out of existence. The world is poorer to -the full extent of the loss. “Is it not possible that the savings of the people, during and since the war, have been wasted in a reckless and shameful manner? Have prudence and responsibility been in evidence among those who have had the handling of the savings of the thrifty? Have industry, ability and thrift been encouraged, and care taken to see that they secure their just reward? If your answer is no, then we may begin to understand the cause of some of our troubles," the speaker added. Relation to Prices. “Everywhere wa hear the cry: ‘Wages are too high, the rate of interest must come down.’ Costs everywhere have lost their relation to prices. The present position of the world seems -tragic. We hear complaints of over-production and of under-consumption, that -there Is too much real wealth in the world; too much wheat, sugar, cotton, wool and unsold manufactured goods. Notwithstanding, Governments throughout -the world are forcing their people, by increased taxation and restriction of Imports, to consume less and produce more.

“There must be something wrong with the exchange of goods and services," Mr Seifert suggested. “The ability to produce has Improved to such an extent that a higher standard of living should toe possible if the machinery of exchange worked with reasonable efficiency. Unfortunately, exchange of 'commodities between nations is -obstructed, hindered, and made almost impossible by the problem of payment of Interest on international loans and investments, and the additional payments -of war debts. “Finance and exchange have broken down throughout the world and no single nation can regain prosperity in a ruined world. Unless the cause of the catastrophic fall in prices is •understood all hope of. improvement would appear to toe in vain. Will people continue to endure increasing privation in the midst -of plenty? Perhaps there is little lime left for those who are in control of policies throughout the world to arrive at a workable -solution. New Outlook Needed.

. “A new outlook is needed to understand the position and deal with it. We must recognise that the world is not 'poverty-stricken, hut wealthy. The fact that we cannot And employment for a large number of people should he a sign that we are producing everything that we need .with less trouble or exertion. High prices cannot.be the cause, because wholesale prices have fallen to an extraordinarily low level. The cause of the alarming position appears to be the great expansion of production which now exceeds the demand. The theory that over-production Is the cause of our troublo is not accepted by all, however. There aro competent people who Hurtle the cause of the trouble is under-consumption. If this idea is correct it certainly offers more hope for Hie future than overproduction, which can only be remedied by restriction in some form or other; amt restriction will only aggravate unemployment, whereas a genuine increase in consumption would solve the unemployment problem effectually. Suffering from Abundance? “Wo seem to be suffering from abundance —100 much of everything —with the solitary exception of gold, which, from a national point of view, is of no use except for a few minor purposes. It is strange Ihe world should be suffering -from a serious economic crisis because there exists abundance of everything we really need. Restriction of output leads us to the uneasy feeling that we have taken the road that, leads .to extortionate prices and shortage of supplies. What could he more irrational or harmful than that capital invested in industry should lose the whole of its income because it has managed to produce a superabundance? Every shareholder without a dividend and every workman out of work puts another man in danger of losing his job. According to the evidence in the present crisis the mischief is cumulative. “The temptation io adopt anything that offers temporary relief is very strong and must he resisted, as it leads nowhere," the speaker continued. “We need a scheme that will stimulate trade and industry, en-* able people to stand on their own feet and look after themselves. Above all., we need a scheme that means real equality of sacrifice.. We are now out of the calm backwater and out into the turbulent, stream of change. The, old anchorage, is left behind and a new one must be found. Mankind is kept- hack by his age-old immobility of mind, greed, fear, lack of eonlhlenee, by selllslmess and deceit. The enemies of change are •' • of courage, also self-interest and

bias, habit, prejudice and indolence.” Mr Seifert, subsequently proceeded to deal in detail with Hie monetary position and Hie factors following the load of international indebtedness.