THE SOLUTION OF THE PROBLEM.

Waikato Times, Volume 118, Issue 19629, 16 July 1935, Page 6

THE SOLUTION OF THE PROBLEM.

The League’s Economic Committee points out in its report that high agricultural protection really hurts the farmer, in whose interest it is ostensibly imposed, for over-protection inevitably means over-production, and directly over-production takes root in a country, the whole machinery of protection ceases to function. Prices drop and it is necesary to have recourse to increasingly burdensome and increasingly artificial methods which, aggravate the situation and increase the discontent of the producer. Even a very small excess of production over consumption is sufficient to bring about a drop in prices out of all proportion to the actual excess. With the advent of the economic depression in 1929, the majority of countries sought a remedy in methods which were useful only when they did not exceed certain limits. There thus ensued, first a progressive increase of duties, followed by the establishment of a system of restrictions practically excluding all imports of important agricultural commodities. The inevitable consequences were not slow'in manifesting themselves. Countries, which in previous years had still imported largo quantities of wheat and other cereals, increased their production to cover their requirements. Often, they found themselves with large excess, which led to the collapse of prices and obliged the Government to dip into State funds again in order to constitute stocks, give bonuses for denaturation, export, etc.

Is it necessary to add that the farmers, having lost their bearings in the face of the collapse of the defensive system which they thought infallible, and being obliged to purchase industrial products which they require at equally high prices, have forgotten that for years they obtained prices representing twice or three times those paid on the world market? More dissatisfied than ever, they reproach Governments with being lacking in energy in the defence of their interests and insist on the complete closing of the frontiers. Thus the vicious circle is complete. 1

The report enumerates a number of indirect effects of excessive agricultural protectionism which it considers no less serious than the direct effects just described. One of these effects is the loss of industrial markets owing to the industrial countries being unable to offer any very considerable advantages in exchange for the concessions which they demand from the agricultural countries. The document concludes by expressing the hope that it may not be unduly optimistic to hold that agricultural producers, having learned wisdom from the experience to which they have been subjected, will realise the necessity of reducing agricultural protection to reasonable proportions and thus gradually re-establishing the pre-war situation.

The solution of the agricultural problem can, it declares, only be sought in an evolution tending towards the resumption of regular economic relations —an evolution which must occur simultaneously in the sphere of industry, commerce, currency and finance. But such an evolution cannot be the outcome of the individual policy of any one isolated country; it can be brought about only by new tendencies adopted simultaneously by a number of countries.