UNEMPLOYMENT AND THE EXCHANGE RATE.

Press, Volume LXVIII, Issue 20630, 20 August 1932, Page 11

UNEMPLOYMENT AND THE EXCHANGE RATE.

I 0 IBS XDHOS or ra* mss. .. has been stated by respon- ; that the raising of the exS f <Trate to £125 or £l3O would fit onlv one section of the eommun--I<B primary producer, at the exliy * 0 f the rest of the community. £* responsible people, therefore, conIff it fni' better that the present iWof deflation should continue, with fatbendaut results of increased unnlnvment, bankruptcy, and falling T? By adopting .a bold policy, I*S>r of controlled inflation, the kfoa of the exchange rate would be "Se to benefit all sections of the com- " tv< The Government cannot hope meet its threatened deficit otherwise J?" bv further dismissals, cuts, and leased taxation, which will make J? position worse instead of better. iwSore, let them consider the policy JSted below. should issue Treasury notes to such deficit and make such notes the currency of the Dominion, in lieu f bank notes, as at present. The Government would lose the bank note ta but would save in interest. In addition, the rate of relief pay could b» increased to 75 per cent, of what HOuW'be in award rates for similar work. The tendency of this would be inflation, and would have the effect of pßdoally raising the exchange rate. Bj adopting tlie procedure of raising tto excWge rate by means of inflation fttougb Treasury notes, two seotions of & e community would be beneThe primary producers, through ihe iacreasc in the exchange rate, i <Sj. lio unemployed, through the fiicreiise in the relief rates of pay. \ 31»8;4re the two sections of the ] community at the present time which Med help; In addition, the remainder of tie community (i.e., those fortunate enough to be receiving either wages or income in some other form) would bene- ' u through the fact that the betterment of the conditions of the primary producers and the unemployed would mean a lifting of the burden on the rest of the community. The raising of the exchange rate would certainly ; mean an increase in the price of imported goods; but with a general improvement in/the position of everybody there would be more spending powejirailahle to meet such increased cost, i; The Treasury notes could be also used id providing work for unemployed teachers. There is no doubt that in its desire to economise in this direction tha Government has already gone too fir. Now more than ever a good education is necessary, and the nation which provides an efficient one for its edajens will be better qualified to deal *iw>the problems of life which now fawns, and those which arise in the fswre:- The suggestion, therefore, is Ityjßjinflation as a means of providing *jj£pwr the unemployed, the result raise the exchange and the Jgll&thiu New Zealand. With the j ' *pF]prices more confidence would ' iSuL? enterprise, and the ' relief wages were only, 75 per FL x* ward wa ges, combined with ! f! m P r ° ve ments of trade, would J»an that as business improved there ITZSJ a gradually smaller demand 9r rencr work and a lessening of the on the public purse to provide fAt the present time there is a falll^ing; f but there is an number of people unable to Warn the means to meet such cost of .Snag., Under the proposal there would »an increased cost of living; but the Piracy would be that everybodv, Wspt the really lazy, would he able W obtain work to more than provide for such increased cost of living. Now Srt vt w can buy what formerly FJtSOs; but every week there is an fefng number without 2Q». Un«fi M he | ame SOs would B LT- *?"!? for Per] .V be obbut nearly evervbody would be regulnr'lv re-