1. 1. This article has been dereloped out of a lecture which was delivered before the Auckland Chamber of Commerce and the Hamilton Chamber of Commerce in August, 1937, and repeated later before an audience of Waikato farmers. It has been modified somewhat in the light of the controversy which it aroused, though the main conclusion remains substantially unchanged. I express my thanks to my critics, both friendly and otherwise, and especially to E. P. Neale, and Malcolm Praser , Government Statistician, for helpful suggestions, and to the Auckland Chamber of Commerce for the loan of blocks for diagrams.
2. 2. In many farming industries the labour unit is the family, and fall wages may or may not be paid to members of the family. For an elaborate analysis of farm costs some consideration would hare to be giren to the definition of the unit of labour; but for the broad purposes of this enquiry such refinements are not necessary.
3. 3. See "Profit Cycle in Agriculture ," Economic Journal, 1926 .
4. 4Such statistical "snags" u mar occur in the above figures are not likely to vitiate this conclusion to any extent. It is worth noting also, that some portion of the land tax asswssed on farmers is likely to represent texes city sotes woned by thoseengaged infarming pursuits; but how much it u d15cult to ownetd.
5. 5Of recent months it has become popular to blame the Arbitration Court for most of the economic evils from which the country is suffering, and in particular to affirm that the disparity between "sheltered" and "unsheltered" prices, which presses heavily on agriculture by raising costs relative to returns, is due to the operation of Arbitration Court awards in raising the costs production of those "sheltered" products which the fanner uses. If this allegation were true, it would reveal itself in the index number of wholesale pries of producer's goods quoted. If it is true that the farmer is suffering from the delayed fall in the retail price of requisites, this cannot be attributed to high manufacturing costs dependent on the evil influence of the Arbitration Court, but to high retail distributive charges.