GUARANTEED PRICES

Press, Volume LXXI, Issue 21631, 15 November 1935, Page 12

GUARANTEED PRICES

LABOUR'S SCHEMES ! CRITICISED i I VIEWS OF MR (GATES j ! ___ i : EXAMINATION OF CUKRENCY: I 1 i PROPOSALS | (runs:* ASSOCIATION 1 r.LE'iIIAM.) WHANGAREI, November U. ! A detailed criticism of the Labour party's proposals oi' guaranteed prices and State control o? currency and credit was made by the Minister tor , Finance (the Rt. Hen. J. G. Coates) j in an election address at Whangarei j to-night in support, of Mr A. J. Mur- j doch, member of Parliament for Mars- i den. I The best and soundest of the Labour party's proposals were already incorporated in the Governments policy, Mr Coates said. They were not just empty promises by the Government, for the proposals had been fully in- ! vestigated by experts and would be put forward in a form to ensure their success. The Government also rea- ! lised that the rate of progress depended on the steady growth ol the national resources and continued .financial stability. Whereas the Labour parly, with a basis of unwise financial ■ proposals, promised (lie millennium in a day. "Labour's guaranteed prices scheme is based on Ihe fallacy that New Zealand can ignore oversea:* price ' movements for its main products," Mr Coates continued, "it is difficult to ■ take the proposal seriously, and the , i difficulty is not removed when if is | shown clearly that the proposal is j : not understood by members of tiie : Labour party themselves. On the subjcet of guaranteed prices they speak .with many voices. They cannot clearly , 'state the price to be guaranteed; (hey • i cannot on the method by which \ the money to cover the guaraiuecd price is to be found." Alternative Methods Two alternative methods had been suggested for determining the guaranteed price. One was to take the aveiagj prices over the last eighi or 10 yea<s, and the other to take the average cost of production, plus the profit io ; farmer, on last seasons prices. iho • I first. method would cost £ 10,000,000 annually at the present exchange, or £ 1!).000.000 at. par. The second : method was so beautifully indefinite • that it was almost impossible to determine the average cost, ol the pro- • duction of butter-tat or wool. If durum the last six years tlv prices ruling bet ween 101',and 1029 had been guaranleed, llie tola! eo: f at the cuilent rate of exchange would have been £13(5.000.0(10, or £200.000.000 at par. To firing this about it would have been necessary to raise the exchange to "00 at least, increase taxation, or resort to borrowing. All three measures would be disastrous m their, 'effects. Only one alternative remained—the creation of credit. This would rapidly, have got out of control and increased . prices to such an extent that confidence in currency would have been ■ .shattered. ' Labour's Currency Policy ! Dei'ling with the Labour parly's j currency policy. Mr Conies said the : Reserve Bank ahead}' emit rolled Ihe ■national credit. However, with Labour on the Treasury beeches, the bark would bo used to finance guaranteed prices, wilh accompanying- grave economic didiculty and financial loss. ! Every country which had attempted 'to create credit in ( xcess of savings already made had landed itselt in difficulties. It was the responsibility of the electors of Ni \v Zealand to see that such action did not undermine the foundations of stability and prosperity which had been carefully laid ■ during the la.-4 few years.