EXCHANGE ISSUE

Bay of Plenty Times, Volume LX, Issue 10825, 23 March 1932, Page 3

EXCHANGE ISSUE

Sir Otto Neimeyer’s View. IXCIIEASK OPPOSED. , Pr «ent statistics do not indicate ' a substantia! diminution In eit" er / Zealand production #l ?hf orient rate of exchange, or 3 ' tnadeatiacv of exchange to meet *« ,„‘-i muuirenimit s and imports,” BSt l Sir Otto Niemeyer . G.8.E., of the Bank of England, in * ourse of "hsm-vations on vow" Zealand exchange question. iVooinions expressed by Sir Otto own nersonal views, and they ar? liVpn in that capacity, and not JftE opinion of the Bank of Enghave read the statement pub.Jd bv Professor Gregory on New ’ inland financial qttestmns. _ says Sir mo “and I am in all essential points 0 mnlete agreement with views he Tlh. ■n.-Mi.'i, »l to. .1f Gtlic "'hole community in New SaTand ami not only section of per- ■■ interests in particular classes !Lrod on balance of all (he circurn--3 and with a view to ultimate %ntsand not merely temporary adNew Zealand has a cornheavy external debt and a inconsiderable volume of indisimports. The factors have f; L S et against any advantages of depreciation to exporters which all experience suggests could only be temporary. , , . . “Exporters have already had near- . to per cent, advantage in depreciilion of New Zealand currency on Irling Plus a further advantage as Linst many of their competitors of ner cent, depreciation of sterling i, s eif in gold. Present statistics do lot indicate either a substantial dimiuution in volume of New Zealand production at the present rate of exchange or an inadequacy of exchange to meet external requirements and imports. , “if as a consequence of further exchange depreciation now there was a substantial increase in the Budget deilcit this deficit will have to he made good either by further taxation—which presumably would fall on exporters who have made additional profits—or by inflationary borrowing on Treasury bills, with a consequent rise of internal costs of production against the exporters. It would seem doubtful, therefore, if temporary ease,would give a permanent solution. Moreover, there' is a possibility and signs of a change in tendency in world prices which strongly suggests the inadvisability of hasty change of exchange policy a.t the pre--1 sent moment.” Freedom Urged. Severe comment upon the opinion of Mr'A. D. Park, Secretary of the Treasury, contained in the report of the Economists’ Commission which was presented to Parliament, is contained in a memorandum on exchange compiled by Mr W. Poison, M.P., president of the New Zoahuid Farmers’ Union, The report of the commission, Mr Poison regards as a triumph (or those..''who have urged ‘that exr change should go free. Boiled down to the essentials, the report of the Economists Commission is a plain statement that New Zealand’s position is such that she must either reduce her costs or increase her rewards for industry tremendously., and that to raise the exchange to a high level is the only practical means of internal readjustment, he stated, All the propaganda in the world cannot disguise that the economists’ report (Mr Park dissenting) Is a’triumph for those who urged that exchange should go free and he allowed to rise to a natural economic level.

The only dissentient from the finding of the commission lias been Mr Park, who it can be fairly said has always taken the short view. It is well known that the Treasury was responsible for. the super-tax on land a few years back, which had to be .immediately repealed; again the Treasury attempted last year to raise, by a property tax retrospective in its applicaion, through insurance, money enough to rehabilitate Hawke's Bay after the earthquake—clearly a plain impossibility in the light of subsequenpevents—and the mind capable of such shortsightedness might be reckoned on to take again the tax gatherers’ view.