HIGH EXCHANGE.

Auckland Star, Volume LXIII, Issue 276, 21 November 1932, Page 5

HIGH EXCHANGE.

boomerang.

EFFECT on farmers.

IMPORTERS PROTEST.

„ K 0 INTERFERENCE" WANTED

At tt mooting of over 30 importers j merchants held this morning in the fVL d Chamber of Commerce rooms to peg the rate of exchange 7?- pcr cent was condemned and the Ins endorsed the Government's policy 0 f non-interference with the 51. Seaman, president of the .Hand Chamber of Commerce, preS at the start, and explained that 5? meeting had been called by the Ls' section of the chamber. Ihe Smber was strongly of opinion that »i matter of exchange was one in lirh the Government should not inter- , The Prime Minister had stated S' the Government was not bringing , n y pressure to bear on the banks. It Sid be seen Hsat strong pressure was Sg exerted in certain political quarts and more particularly on the Bank Ifvew Zealand, in which the Governient was substantially interested. The Sea of the Government fixing the rate of exchange was wrong; the banks should be left alone, as it was their province to determine what the rate should be.

Reaction Within Six Months. As Mr. Seaman had to leave to attend mother meeting, Mr. Gainor Jackson took his place. Mr. Jackson said that if the demand for a liigh pegged rate of exchange were given effect it would nhake the commercial structure to its foundations. A high exchange would mean a loss to trading concerns, would eause unemployment, and mean that for overseas interest the Dominion would lave to find an additional £2,500,000. He prophesised that the inevitable reaction would come within eix months, tnd the farmers would find that the payment of advances on produce by the banks would have to stop, _ and money would not bo available until the produce reached London. The exchange market would simply collapse and the enormous accumulation of funds in London would mean a great loss. If the exchange was forced up the imports into New Zealand would disappear to vanishing point, the banks would not be able to pay out advances to the farmers, and their position would be worse than it wits to-day.

Mr. H. J. Tuck then moved a resolution: "This meeting of Auckland merits and importers endorses the Government's policy of non-interference in exchange rates," and confidently asserts that a high adverse exchange rate without economic justification, will be detriments to the best interests of this Dominion . . I n support of this twelve reasons were adduced.

Mr, H. E. Vaile asked if the advocates ti alugh exchange rate put forward any irguments. How did they propose to make .up for the ruination of the towns?

Mr. Jackson said they did not seem to advance any arguments at all. They did not seem to have delved into the reasons why the farmer was in a bad position to-day; the remedy proposed was merely a shot in the dark. Australia's Example.

Mr. Malcolm Stewart wanted to know if Australia was not a proof of the advantages of a high rate of exchange.

Mr. Jackson said he thought the position of Australia was quite different from that of New Zealand. Australia was to a large extent self-supporting. While some recent visitors had said that the Commonwealth was improving faster than the Dominion, he thought they had teen blinded to the true facts: Three to five years ago Australia's trade balance was very much adverse; she was correcting that, but lie felt that she was not yet out of the wood; she was right on top of an over-inflation boom.

Mr. Stewart said that in spite of a Matraction of import. trade, Australia was still carrying on; she recognised that a high rate of exchange was helping the producers. Taxation was being reduced, and surely that was the answer *8 to the general position.

Mr. Jackson said Australia was reducing taxation in one way, but at the teae time she was arranging for a £2,500,000 tonus to the wheatgrowers, ud there was also the Paterson bounty tor butter.

Mr. Stewart: What is New Zealand long to help the producer t Mr._Jackson: In your own business she ■ giving a bonus of £100,000 on fertiliiers, allowing remission of rates, reducing the railway freights on lime, man--4 ' and giving remission of income ■ J®* to farmers.

G. Lunn considered that when a per cent exchange " w an rate, but if New esuand got a similar rate it would be ounsel of despair. The country could " did not import. The in ojjv?- ra< ? was a sa fety valve, and if «« x? weight of 25 per cent were ?«v . 6 ? afet y valve there would be lain +?. HP-' the country -wished to k»L» mers with a subsidy let it » done openly by taxation.

Evils of- Paper Money. W-r? DonaW it would be Sll? k , at . the matter from a parBet inmost Vlew " Tlle f armer might SeCS? t ®? P T ry . benefit from a iig ll few Jt would be only a i® the Portion would be quoted. -Australia had been ffi 116,I 16 , feet was that Australia of wl • g on ov erdrafts, and a boi,nd to come; mU A I I Pa T t 7 ** the fearly banhw the States were *ant to livp « Zealand did not *as what .1; ? P a P er money, but that Tie m r 6of exchan ge meant. And it parried unanimously, piffle Minister t l end Co P ies to tfie Bouse, and to member of the ' nQ t0 all the banks.