The Press Saturday, October 15, 1932. Ottawa and Commodity Prices.

Press, Volume LXVIII, Issue 20678, 15 October 1932, Page 14

The Press Saturday, October 15, 1932. Ottawa and Commodity Prices.

I tin-ill Britain's undertaking to impose a. quota on her imports oi' I deign mutton and lamb, Mr Coates announced ihnt the objects ol! the H-heme were "to raise the price of '• meat to a remunerative level and •• progrc.-isively to increase the share ••of the Home producer and the Do- " minions in the United Kingdom "market.'' It need hardly be said that, as far as .New Zealand is concerned, the first object is the more important. Much of (lie meat produced in Xew Zu-aland last season was produced at a loss; and if the Ottawa agreements have no other effect than ft., increase Xew Zealand's share of the Home market they will be of uncertain value. Nevertheless, the news that the quota, scheme is to be to raise prices will arouse serious misgivings in a large section of (he British public, and will probably tell against the present British (iovernment at the next election. Mr .Neville < 'hainbcrlaiu, it is true, announced at the opening of the Ottawa Conference that "his Majesty's.

"Government. |in Great Britain] desire to see wholesale sterling prices "rise"; but it is elear that lie ilid not e( nti'iaplnto an attempt to raise prices by restricting markets. The Monetary Committee of the Conference, to which this question was referred, took a very sober view of the possibilities of immediate, action:

In the monetary .sphere the primary liui! of action louards it rise in pi'iees should bo ihi! cre.it.ioii and maintenance, within the limits of sound finance, of such conditions as "ill assist in flu; revival ot* enterprise and trade. Among the>.u conditions are Jow rates of interest and an abundance of short-term money. . . . ]t must be kept in mind, however, that the success ol any such policy will he hampered and niieiht bo nullified by the failure to modify or remove important non-monetary obstacles. Of the uon-nionetary factors which arc depressing the level nf prices manv aro of international character and require an international remedy.

Although it offers little hope of immediate results, the line of action recommended by the Monetary Committee is the only sound one. The raising of prices by market restrictions may easily prove au illusory pain to the Dominions, since it may lead to a serious shrinkage in demand. ft is worth remembering that the Home demand for commodities like meat depends largely on the purchasing power of tho British working el asses, Liid that therefore it is sensitive to very slight increases in the cost of living. Mr Chamberlain is cnrefnl to talk of the need for a rise in wholesale prices; but it is questionable whether, in the case of meat, wholesale prices can be raised sufficiently to benefit the producer without affecting retail prices. It would therefore be unwise to be confident that the meat agreement will raise meat prices or that the British Government will be anxious to use it for this purpose. This does not mean that meat prices cannot bo raised; merely that the only safe and unreservedly beneficial method of raising them is that suggested by the Monetary Committee of the Ottawa Conference tc raise commodity prices gonerally. In this connexion it is encouraging to find that in Great Britain the banks and the Treasury are already carrying out tho policy, recommended by the Committee, of lowering interest rates and increasing the supply of short-term credit. Moreover, although statistics on the point are somewhat at variance, there are grounds for believing that ; n the last three months gold prices of primary products have advanced by between nine and ten per cent.