Dollars for Tractors

Press, Volume LXXXIV, Issue 25554, 23 July 1948, Page 6

Dollars for Tractors

We print to-day a statement by Mr R. G. Buckleton, chairman of the action committee of Federated Farmers, in reply to a leading article on the federation’s plan to buy 10,000,000 dollars’ worth of American tractors. In his first sentence and in his last paragraph, Mr Buckleton accuses “The Press’’ of “ confusing ” the plan with the present dollar deficit. We have, not “ confused ” the two, but we have pointed out that they are related. The scheme submitted to the Government by Federated Farmers is prompted by the dollar deficit. We found no fault with the object of the scheme, or with its “ lofty mo- “ tives ” (indeed, we sympathise with them); we did say that its mechanism needs to be thoroughly examined. Mr Buckleton cannot expect us or anybody to consider the scheme, or its merits and high motives, as something separate and apart from the dollar problem, as if the connexion were dissolved 1 as soon as he says that the schejne will “ in no way accentuate or relieve ’* that problem—which is the question to be studied—and that his federation “does not desire in any way to “interfere with existing trade be- “ tween the U.S.A, and New Zealand, or between the U.S.A, and “the sterling area’’. The scheme must be considered in relation to the dollar deficit and to the trade transactions of this country as a whole. The earmarking of the proceeds of a proportion of the country’s primary production for a special purpose is unquestionably an interference with the normal

processes of trade. For reasons into which we have already entered fully, and which Mr Buckleton ha§ not even attempted to counter, we suspect that the ingenious combination of barter and credit (which is what the Federated Farmers’ proposal amounts to) would leave the dollar pool of the sterling area the worse off. Even so, the scheme may still be worth while, stated simply as a short-term dollar credit scheme. That, as we said before, can be decided only by studying its relation to trade transactions as a whole; but if the plan as at present put forward increases the difficulty of the dollar problem then it fails in respect of one of the essential claims made for it. Mr Buckleton emphasises that Federated Farmers are “in no way endeavouring to “ solve the dollar deficit ”, as this is a matter for governments. That is true; but the problem will not be solved by considering, in isolation, schemes of this sort, or by disregarding their probable and possible effects in a wider sense. It is by no means unlikely, for instance, that within a short time New Zealand will be required, both in her own interest and in the interest of Great Britain and the whole sterling area, to expand the present volume of primary exports to the United States by very much more than the 1000 tons of butter and the 1000 tons of meat which Federated Farmers propose to reserve each year from the normal terms of trade. There is another reason why the scheme needs to be looked at carefully: it could easily distract attention from the fundamental problem of the dollar deficit, which is to reduce dollar spending as far as possible and to increase dollar earnings.