TRANSACTIONS OF SECTION b. '-ril7 



2. P\irther, if any one trade is controlled in re=;pect of prices the same rule 

 must be applied to every link in the chain of production. Otherwise an excessive 

 price of any one factor may unduly raise the cost of the whole. 



3. Again, investment of capital may be discouraged or capital sunk in 

 existing operations may be withdrawn and placed on deposit. Thus a scarcity 

 of commodities will be created. 



The flow of capital cannot bo controlled or the avenues of production be 

 maintained on unprofitable lines under conditions of private enterprise. 



Logically, the only effective policy is for the State to control the channels 

 of production and to give orders which must' be obeyed by producers. The 

 State will own material and direct the channel and volume of production. 

 This involves eventually the State control of all production, for if prices are 

 fixed in Government-controlled establishments alone trade will be diverted 

 to establishments that are privately owned. 



In the next place, if the S'tate is to avoid a glut in production and a loss 

 to the taxpayer an estimate must be provided of all requirements ; but whilst 

 the total estimate may be stated, the individual, from a variety of causes, may 

 exceed the maximum production expected from him. This would seem to 

 involve a further control of each individual's output, and if applied to one 

 trade must be applied to all in any way dependent upon it. 



Thus we are forced into State Socialism and control of the means of pro- 

 duction and distribution. 



Nationalisation is impracticable. Is such a huge Civil Service possible? 

 Can production be regulated on sound business lines ? Can the management be 

 freed from political pressure? Will it not lead to inefficiency of labour, reduced 

 output, higher cost to the people, or losses to be made good by taxation ? 



The war experience in Great Britain in the direction of State control canjiot 

 be taken as a safe precedent. Experience is against Governmental compulsory 

 price-fixing. An attempt was made during the French Revolution, but the 

 result was to divert production to more profitable channels, to create a real 

 scarcity, and cause privation to the people. In a few years a loud demand was 

 heard to abandon the policy of fixing prices. 



In New South Wales an effort was made in recent years to limit prices in 

 respect of butter and wheat and hay. But the experience was the same as 

 during the French Revolution A real scarcity was created, and the Govern- 

 ment was compelled to make good the shortage by purchases from overseas at 

 a price which was greatly in excess of the maximum previously fixed for the 

 article. 



The true remedy lies in — 



1. Public investigation of the costs of and profits from operations which 

 are suspected of profiteering, by means of a tribunal of investigation with com- 

 pulsory powers of extracting information and giving full publicity to the 

 inquiry. Trusts and profiteers abhor the daylight. The public would learn who 

 are the offenders and the fear of exposure would compel all producers to bring 

 their pric?A to a figure which can be .absolutely justified. 



2. If the tribunal reports the prices of a commodity are excessive, this 

 shall by statute be deemed to^ be prima facie evidence of an offence, involving- a 

 heavy fine The defendant would be entitled to acquittal provided he can 

 show (1) that such figures were not in fact unreasonable, bearing in mind the 

 claims of workers, employers, and the general public; and (2) that thev were 

 not in fact detrimental to the public. 



In this way competition may continue on normal lines. Any attempt to 

 corner commodities would be countered first of all by public investicration ; 

 secondly, by public reprobation ; and, thirdly, by heavy penalties if the first two 

 methods failed. The dangers of trade beincj diverted would not arise The 

 experiments of State Socialism need not be risked 



X 2 



