PRESS VIEWS.

Auckland Star, Volume LXIV, Issue 17, 21 January 1933, Page 11

PRESS VIEWS.

COMMENTS IN SOUTH.

DISASTROUS BLUNDER.

" DOOR TIGHT SHUT."

Under the heading "A Disastrous Blunder," the "Evening Post," Wellington, said editorially yesterday: "Though the direction in which the Government was being carried by the demands of the agricultural and pastoral interests for a high exchange had been notorious for several days, it has succeeded in completing the last stage of the deliberations at a pace which lias taken the public by surprise, and is calculated to aggravate the annoyance and the indignation of those who bear the burden of this sectional preference. Those who went to bed in relative peace of mind last night under the impression that the door Avas still open, have their answer to-day. The Government has been at work while they slept. The door is tight shut, Mr. Downic Stewart is on the wrong side of it, and how much of the strength of the Government and the confidence of the public has gone with him is a question to which we prefer not to attempt a definite answer. It is probable that at present the public is most deeply impressed by the loss that the Government and the country have sustained through the resignation of Mr. Stewart, which the action of his colleagues has enforced upon him. Invaluable at all times, Mr. Stewart's control of finance has been very widely regarded as indispensable now, and has certainly constituted one of the most powerful claims upon the public confidence that the Government lias had."

The "Post" describes the raising of the rate as an "amazing departure from banking practice." If the adverse effect were the consequence of an unavoidable rise to a higher true level, it would have to be met; but it has not been argued by those qualified to give a judgment that 25 per cent is anything but artificial. The "Post" asks how the additional cost of over £3,000,000 on the State is to be met, and, further, whether the Government has reckoned the burden on importers and local governing bodies. It concludes: "Has the Government ascertained, in something better than round numbers and percentages, the true position of the exporters, the urgency of their need, and how far the largess now to be indiscriminately distributed will be intercepted by creditors and applied to keep land values still inflated? These are questions which a Government which lias rushed into inflation should be ready to answer without delay."

*Bad Development." The "Dunedin Star" says: "It has been an old complaint that the banks controlled the Government. The Government has controlled the banks by its latest course in a most startling manner, and we can only regard that as a bad development. Banks, should know their own business better than anyone else could know it. Dictation of their policy can easily be more dangerous than almost any other Government interference with commerce or industry. Mr. Stewart's sacrifice will cause his reputation to shine brighter. . . . The Government's position will not be endangered by his withdrawal from it, but there is no doubt that the Government will be weakened."

Intensifying Stagnation. The Christchurcli "Times" says: "There is no doubt the high exchange, and especially the uncertainty as to the future movements in the rates" are a considerable factor in the business stagnation that prevails. The further rates have seriously affected New Zealand's credit abroad, increased the cost of new borrowing, added further to the weight of interest payments abroad, and prevented prices and the cost of living falling as much as they otherwise would have done. It is true that exporters are receiving an exchange bonus of approximately 10 per cent, but it is not very long before any temporary advantage obtained thereby is cancelled out in higher rates and taxes, higher costs of goods, and general reaction from the slackness of trade. If those were the effects of the exchange rate at 10 per cent, it is hard to discern how, with a further increase, there will now be an impetus to industry, and an easing of the position regarding unemployment." Saving the Farmer. Tho "Christcliurch Press" says: "Greatly as Mr. Stewart's defection from tho Government is to be ( regretted, it should not startle the public into the assumption that he, as a financier, must be right, and the new policy wrong. The Dominion's problem to-day is not in its most real and pressing form budgetary, but industrial. It has its budgetary implications and consequences, of course, but the inescapable qnestiori before the Government is whether the farmer is to break or be saved. If he breaks, the country breaks, Government breaks and Budget breaks. The Government's decision, though its immediate object is to relieve the farmers, involves no departure from the general aim of restoring tho prosperity of the whole community. Further progress will now follow from the exchange addition of 13J per cent to export values, contributed. it is true, by the rest of the community, but while there is no alternative to this redistribution of national income, several factors are overlooked by those who protest against it. Ons is that high exchange raises the total national income, with buoyant economic effect, especially so because the flow of money is first stimulated through the channel where it has been most disastrously retarded —from the farmer to the city."

Protecting Coalition. The ChristchurcU "Star" emphasises tlie Government's disregard of its financial advisers and dwells on the unanimous condemnation of the banking and commercial,interests. It adds that Mr. change of front is dictated by a desire to save the Coalition. Dealing with Mr. Stewart, the "Star" says:_ "His resignation is primarily a repudiation of Keform policy, a fact which is emphasised by Mr. Coates' hardihood in assuming the portfolio of Finance, and if Reformers throughout the country are now questioning the motives and sagacity of their own leaders, what must be the state of mind of those who were reluctant enough to take an undivided Reform party into partnership? The fact is that town and country interests have now been sharply divided, as far as the present Cabinet is concerned, by an abandonment of the spirit of compromise and conciliation upon which the Coalition was founded."