Editorial Comment

Progress, Volume XV, Issue 1, 1 September 1919, Page 589

Editorial Comment

Except for the Labour Department’s Housing modest building scheme, no practical Many work is being done at the moment to Suggestions, settle the housing difficulty, but there is a tremendous amount of discussion, and some excellent schemes are in the air. We think that the housing proposals put forward by the Parliamentary Committee which investigated the industries of the Dominion during the recess constitute the most effective recent contribution to the question, and the Committee’s report was presented just at a time when politicians were in their most receptive mood. The Committee was representative of all shades of politics, and no doubt is a compromise which could be put through Parliament in the form of legislation. Briefly, the idea is to use the credit of • the State to finance housing on a big basis, and that,' to a certain extent, the State should subsidise the schemes by granting money at 4 per cent., regardless of the actual interest paid to those who take up Government bonds.' As the present rate of interest paid by the State is 4i per cent., free of income tax, this is quite a substantial concession, especially when compared with what the private borrower would pay in financing his own dwelling—6 per cent, on the average. Quite wisely, the Committee recommends that local authorities should be encouraged to promote housing schemes'aided by the State’s cheap money, and that the tenants or prospective purchasers should be charged 5 per cent, on capital value, plus rates. • They suggest the creation of a National Housing Department, which shall have power to undertake large schemes of housing, and even to run sawmills and other industries associated with building. An amount up to two millions sterling is named, as the capital to inaugurate this housing scheme, and it is estimated by the Committee that three thousand houses, accommodating about fifteen thousand people, would thus be provided. So far, we have not heard what the Government proposes to do in the matter, but the Liberal Opposition has already 1 given voice, Sir Joseph Ward declarin'? that he has a.plan by which a working man nrav enjoy the privilege of being his own landlord at the modest rate of 10s. 6d, per week. The

Wellington City Council has a housing scheme under consideration, and, it is estimated that eighteen fiveroomed dwellings in a suburb where land is comparatively cheap will work out at a capital cost of £960 each. On the basis of the suggested fiye per cent, plus local rates, this would mean a payment of about £1 per week; so that the difference between Sir- Joseph Ward’s preelection promises,' and actual experience, is considerable. We would be»glad to see the ex-Minister of Finance develope his theory, for hard facts give it a visionary colour. We heartily approve the Select Committee’s proposals as having a good practical appearance, • and a boldness which -is in accord with the extent of the problem. Local authorities can better undertake the supervision of schemes than any central authority, which are notoriously slow to move, and for this reason we hope that during the present session Parliament will authorise the financial proposals in the Committee’s report, so as to encourage local bodies to go ahead. One important point will to be guarded against, and that is local indifference or hostility. It is obvious that this State-aided scheme is going to compete against the private owner of houses. Capital has not gone into housing of late years, for it has been a poor investment. The cheapening of building by improved financing and large operations will make the difference between the privately-built house and the Stateaided enterprise more obvious, and property owners who are holding,positions on local authorities may begin to obstruct. Consequently, the requirements of a district may not be supplied. This is where the National Housing Board comes in. If there is legislation this session, we hope it will include a provision similiar to that of the English Housing Act, under which the Governmental . authority may force a local authority to construct dwellings where it is satisfied that the need exists and the local authority has failed to rise to a sense of its responsibilities in the matter. New Zealand’s law could provide for the Housing Department doing the work in default of local action. It will take some time to organise the National Housing Department, and meanwhile local bodies can demonstrate what they can do on their own account, with the encouragement of capital at 4 percent. Though - a year has passed since the firing of the last gun in the war, there is no real peace in the world, for social unrest has developed to such a widespread extent that the rulers of peoples seem to have only disposed of one great problem, to be faced with another of equally serious import. In our own country, the cry against the profiteer is just as bitter as during the war, and the politicians, on the eve of an appeal to the people, are talking of drastic things as a sign to their electoral masters that they are doing their best. And millions more are being borrowed to clean up war liabilities and settle the soldiers, with the result that the currency is being further inflated, and the values of the sovereign is dropping. The temporary recovery -of a fractional character which the Government Statistician was able to show in his cost . of living figures a couple of months ago has ceased, and we have almost given up hope of any substantial reduction in prices. ; When this condition of things is * recognised as normal, re-adjustment will take place on the : new basis, but this means strife in the industrial

The Declining Sovereign ' and a Remedy.

world, and uncertainty on the part of investors. There is a growing feeling that as the currency is -at the root of the troubleprofiteering being also an element but not the sole cause—the remedy should not be sought through the rule-of-thumb methods of the politician, but that experts in-finance should be brought to the aid of the State to evolve a system of adjusting the basis of payment of wages.and every other monetary transaction upon a system which will give a steady and not a fluctuating .standard of value. Over forty years ago the famous authority Stanley Jevons, propounded a theory of a tabular standard of value, and he was not the first to think of a system which would aim at making the purchasing power of money uniform. The idea he put forward, to translate it into simple present-day terms' was that if a man’s wages were fixed to-day at £3 per week, a-permanent commission of qualified authorities should set down the purchasing power of that sum, by reference to a large number of commodities in common use. This statistical work should be constantly -main-. tained and at regular intervals the results should be published, with a comparison of the current prices in relation to those when the £3 bargain was made. If it is found that at a later date, the sum required to purchase what could formerly be bought for £3 is now £4, the wage should be paid in a paper certificate, the value of which is constantly maintained by enabling it to be redeemed in gold bullion of greater or lesser quanity according to the position of the index number of the cost of commodities at the time. To show the working of the principle advocated, we have only quoted a case of wages, but it was suggested that every transaction in which money is involved*could be subjected to the same process. It would enter into every relation of debtor and creditor. The only difficulty which Jevons foresaw was that of deciding upon the proper method of ascertaining the averages. But since Jevons’, time Governments have developed statistical services which are quite capable, with some extension, of covering this important duty. We shall hear more about this new proposal, which after all is not so old. It is therefore worth while quoting Jevons on the advantages which he contended would be secured people greatly troubled over the mysterious decline in the value of the sovereign: “Such a standard,” he wrote, “would add a wholly new degree of stability to social relations, securing the fixed incomes of individuals and public institutions from the depreciation which they have so often suffered. Speculation, too, based the frequent oscillations of prices which take place in the present state of commerce, would be to a certain extent discouraged. The calculations of merchants would be less frequently frustrated by causes beyond, their control, and many bankruptcies would be prevented. Periodical collapses of credit would no doubt recur from time to time, but the intensity of the crises would be mitigated, because as prices fell, the liabilities .of debtors would decrease approximately in the same ratio.” So here we find a doctrine overlooked for forty years, coming back into prominence, with influential advocacy by economists, which may bring into our industrial relations that stability which is so sorely needed,

The Tabular Standard of Values.