POLICY DEFENDED

Ashburton Guardian, Volume 56, Issue 16, 31 October 1935, Page 6

POLICY DEFENDED

THE GOVERNMENT CAMPAIGN.

NATIONAL REHABILITATION.

SPEECH BY MR COATES. (Per Press Association.) AUCKLAND, October 30. A full review of the steps taken by th 6 Government toward, national rehabilitation was given by the Minister for Finance (the Rt. Hon J. G. Coates) in opening his campaign in his own eliebtorate, Kaipara, at Riverhead. Though thb meeting had been arranged •at short notice, there was an attendance of more than 100, and Mr Coates spoke for 2% hours without a single hostile interjection. At the conclusion of the address a vote of thanks was carried unanimously.

“We have come through the most difficult crisis this country has ever experienced,” said Mr Coates. “Tonight there is a different story from that which I told yon in 1931. We have won our way through, and during the last two years we have achieved Budget surpluses, with restorations in pensions and civil servants’ salaries. Four years ago we asked for a free hand to reconstruct the finances and economic condition of the country. We have done that, and we now ask you to consider the future.

“The progress of the last four years has riot been achieved by guesswork. Our plans have not been haphazai’d. They have been clear-cut, definite and effective. It was inevitable that sacrifices should fall on all sections of the community, - but the measures taken were essential to our rehabilitation. Some people say the Government * called in the doctors.’ We did call in expert advisers, and asked them to examine all the factors in our economic ,and financial position. They assisted us to investigate yarious problems, and we then framed our policy. Any sensible business man would do the same.” Mr Coates quoted figures showing the collapse that occurred between 1928 and 1931. Export prices during that period fell by 43 per cent. ; but the fall in internal prices was only from 7 to 10 per cent. The estimated national income fell from £154,000,000 to £102,000,000, the value of all production from £128,000,000 to £85,000,000, the value of farm production from £83,000,000 to £50,000,000, and the value of exports from £56,000,000 to £35,000,000. The position had been complicated by uneven distribution of tbe fall in prices. The remedial measures taken by the Government were largely directed toward putting the farming industry on a sound basis; but the other sections of the community were not overlooked, and the policy was directed in the interests of the couritiiy as a whole. The Main Problems.

‘ ‘Til© main problems which had to be solved were economic reconstruetion and financial reorganisation, Budgetary stability, relief of unemployment, and the safeguarding of markets. The scheme of economic reconstruction , involved two main lines of action, said Mr Coates. “The crux of the problem was to remove the _ disparity ‘ between costs and export prices. Wit i / the latter down by 43 per cent, and ' costs only by 10' per cent., farmers profits shrank to vanishing point. A reduction of costs by about 40 per cent, was necessary to bring about recovery. The gap was too great to be bridged by cost of reductions alone, and If conditions had been left to take their course chaos would have iesulted.” . One of the steps taken, continue Mr Coates, was the raising of the exchange rate. The virtue of this was shown by the fact that on the most conservative possible estimate, th national income in 1933-34 wasi highei by £14,000,000 than it would have been with exchange at par. To sustain the same revenue at par, the - I rates would have to be increased by about £2,000,000 a year. Those who were advocating a reduction in the exchange rate,-would be well advised to think where the cost would tau. The indent agent might possibly reap a harvest; but shopkeepers and others with stocks in hand would have to bear the burden of the losses. W hat was really wanted was stability tor some years ahead. High exchange had not reduced imports. tor the year ended August, 1935; imports were valued at £34,700,000, or nearly £6,000,000 more than m the previous year. The surplus of exchange during the same period was no more than sufficient to meet the Government interest due overseas. There was also a reduction in the exchange funds held by the commercial banks and the Reserve Bank together, of about £5,000,000 in New Zealand currency, if allownace was ' made for the sals of gold overseas. Increased Exchange. The increased exchange was in no way contrary to the spirit of the Ottawa agreement, said Mr Coates. At Ottawa, the right of each country to determine its own currency , was - freely recognised, although the whole Empire had agreed to work for reductions in the price of money and the cost of credit. Mr Coates dealt at some length with the restoration of Budgetary stability, and commented on the restoration of salary cuts to civil servants. The Government fully appreciated the great sacrifices they had made, and would restore the cuts in full at the earliest possible opportunity. The unemployment problem was also touched on by Mr Coates, who said it was manifestly a folly for any party to try to borrow its way out of difficulty. Finally, he reviewed the future policy of the Government as outlined in the Government manifesto. “Oitr Watchword is stability with progress/’ he said. “I do not believe it to be honest to attempt to capture votes by making extravagant promises which are incapable of fulfilment. However, we can say with confidence that the need for drastic meas-

urea is now past, and once more, carefully but definitely, wo can move forward.”

SIR A. RANSOM’S COMMENT.

LABOUR AND GOVERNMENT.

DANNEVIRKE, October 30.

In opening his campaign for the Pahiatua seat, Sir Alfred Ransom, speaking in the Porangahau district, said that the campaign was. essentially a contest between the Government Party and the Labour Party, ajnd that the Democrat Party, which was antiGevernment and anti-Labour, did not provide a serious alternative. * Sir Alfred Ransom traversed the work of the Government during the depression. He dealt with the promises of Labour, and urged the electors to return a Government which had already laid a sound foundation for the returning prosperity which was now apparent. He said that he was not in the campaign to apmugise for the Government, but to show that in a major degree it had successfully administered the Dominion during the unprecedented world depression. The Government had riot sought popularity by an excessive borrowing policy to establish a fictitious standard, but had followed a fearless course. By l its policy 'of equalising the burden and ultimately conferring the greatest good on the greatest number, it had placed the Dominion in a position to reap the maxiriium and immediate benefit when economic conditions improved. Declaring that the Labour Party was the only alternative to the present Government, Sir Alfred Ransom dealt trenchantly with that Party’s policy, and asserted that it would be financed only by the deflationary monetary system which had proved such a tragic failure in other countries. One of the Labour Party’s main planks, not referred to in the present campaign, was the abolition of the country quota, which', if it were ever put into effect, would give a definite majority in the House to city constituencies.

Dealing with the measures adopted by tbe Government to facilitate economic recovery, the cahdidate explained the provisions of the Land LaWs Amendment Act, passed last session, enabling practically all classes of Crown tenants to apply for revaluation. Steps were also being taken to deal with arrears of rent and interest, and, where possible, to consider the adjustment of discharged soldiers' mortgages on a voluntary basis between the Department and the mortgagor.

The candidate w&s accorded a unanimous vote of thanks and confidence iri him and in the Government.