FARMERS’ PLIGHT

Dominion, Volume 26, Issue 97, 18 January 1933, Page 10

FARMERS’ PLIGHT

Higher Exchange Urged VIEWS OF PRODUCERS Many Subjects Discussed MEETING IN WELLINGTON Bv a five to one majority members Of the New Zealand Farmers’ Union and representatives of other agricultural organisations, who met in Wellington yesterday with the object of discussing .proposals for the relief of the primary produces, passed a resolution advocating that the New Zealand exchange iate be raised to a point at leaBt A ®’"“ l ti ‘“ that of Australia and Aigentine competitors. Thirty-live member supported the motion and seven voted against it, the opposition coming from the Hawke’s Bay members from the Manawatu. Exchange, interest rates, tariffs and taxation were among the important questions discussed by the meeting which was convened by the New ,zea £ Vu’me-s' Union. were moved and seconded by men pimminently associated with some phase of primary production, after which a general discussion was allowed on the particular issue involved. Voting and discussion was confined to members of the union and other primary producers invited to be P Commercial and other interests, includin'’ several Members of Parliament not connected with primary P r °' were present in the capacity of obsei V ”lr.°W.J. Polson, M.P., presided- The object of the gathering, he said, was, impossible, to assist the Government, which was distracted by the many grave difficulties confronting it. Ihc. Government was seeking the best possible way of dealing with these proolems, but it had all sections of the community to consider and not only the farmers. They were not there that day for destructive criticism, but to define their own views and inform the Government of what they thought essential for the primary producers in particular, but at the same time not be forgetful of the rest of the community. No plan could succeed which did not take all sections into account. At the same time he did not think it the Government’s duty to spoonfeed any particular class. He did not think they expected anything like that. lie believed it essential to undertake important economies. The immediate problem pending national readjust/inent was to keep their industry from extinction. Upon the fate of the primary producers rested the fate of the whole of the community. The capital margin of farming properties had disappeared in many eases and was disappearing in all cases. Sheep lands interest free to-day were unprofitable and dairying lands were rapidly heading in the same direction. That was a grave and serious situation. Sympathy With Unemployed. He had every sympathy for the unemployed right up against the very hardest conditions, but they were receiving food and some payment. Hundreds of farmers were in a worse position in regard to food and, further had lost till they possessed. He knew of some appalling cases of want and destitution in the back country. They were not heard of simply because they were in the back ; country. The cities were suffering severely. He believed the cities were wakening up to the fact that their prosperity was dependent on that of the farming community. It. was the British way to pay debts, but, if things went on as they were it might be necessary for them to compound with their creditors. He wanted to see every class in this country able to pay its way, but some plan must be discussed and devised or else they would not be able to do so. It was hopeless for them to control external conditions. Their internal problems, said Mr. Polson, were high interest rates, crushing effect of taxation, high costs and reduced spending power of the community. If they could remove some of those handicaps they would create employment and restore confidence. They wanted increased external prices and the remedy was to improve internal conditions so that the deficiency could be made up. No plan was likely to be acceptable to the Dominion as a whole that provided for the farming class alone. A plan that was fair and reasonable had to be provided. The resolution in favour of increasing the exchange was moved by Mr. James Begg, of Dunedin, a member of the New Zealand Meat Producers’ Board. Bittle that was new, he said, could be said about the question of exchange, which had been hammered at for at least 12 months past. Nine months ago the farmers were passing resolutions demanding a free exchange, believing that if there -were a free exchange it would rise. At that time many of the city interests demanded a pegged exchange. To-day the same interests were demanding free exchange and the primary producers wanted a pegged rate. Obviously there was no principle at the back of either demand : there was a want of intellectual honesty about the whole matter. Some Arrangement Necessary. In his opinion some arrangement of the exchange was absolutely necessary. Under the Paterson scheme and the exchange, butter exports from Australia were increasing by leaps and bounds, and New Zealand exporters would find it difficult to keep up in the face of competition of that kind. The farmer was going steadily down, and if lie could manage to live at all it was at the expense of improvements and depreciation of the farm. It had been said that if matters were left alone they would adjust themselves. That was true, but it was questionable if it would be wise to take that course. If anything could be done to ameliorate the position it should be done. Assuming the exchange went up to 25 per cent., the rise of 15 per cent, would not put the wool farmer on his feet. Nevertheless it would be one of many factors. If a farmer knew he was to receive another 19 to 12 per cent, for all his produce it would put new confidence into him. He would be

absolutely in favour of free exchange if they could get it, but free exchange presupposed free exchange of goods.

British Government’s Move.

No prosperity would come to the farmer unless his spending power were increased, Mr. Begg continued. Exchange. together with other things, was one way of doing that. No Government could stand aloof and say the matter

was one for someone else. The British Government had interfered with exchange, putting aside a huge sum to keep exchange where it wanted it. There was good reason to believe that that sum had been used to keep exchange up, rather than keep it down. Exchange was one question that could be dealt with immediately, and its ameliorative effect would put new heart into the farming community. In seconding the resolution, Mr. W. Machin, of Christchurch, general manager of the New Zealand Farmers’ Co-operative Association of Canterbury, Ltd., said that the total value of New Zealand’s exports and imports was 10 per cent, less per head of the community than in 1914. He would not suggest that exchange was a panacea for all their economic troubles. Interest rates were too high in comparison with their income. The unit of values in a country like New Zealand should be the unit of production and not a unit of'monetary values.

Referring to the report of last year’s committee of economists, Mr. Machin said that too much attention had been paid by the country-to the addendum added to that report by the Secretary of the Treasury. Events showed how short-sighted and puerile was that objection from the head of the Treasury. The gem of the objection was in the statement of the secretary that if there were to be an adjustment a much more orthodox method than the exchange could be found. That orthodox method, had not been discovered. Opposition to Resolution. Opposition to the resolution was expressed by Mr. C. A. Wilkinson, M.P. for Egmout. The question of exchange was a matter of buying and selling. If exchange were lifted to a high rate who was going to buy it? The only possible way of raising the exchange in New Zealand to the level suggested was for the Government to guarantee the banks against loss. Millions of pounds in taxation would have to be raised to cover that. In effect the proposal imposed a tax on British imports, and Surely the duty on those goods was .sufficient already. The question was quite impracticable unless the Government guaranteed the trading banks against loss, and that was almost impossible. Mr. R. E. Talbot, of Hawke’s Bay, said the arguments advanced by Mr. Wilkinson were just as convincing as those used by the two speakers who supported the raising of exchange. At present they were well past the middle of another export season. The bulk of this season’s export was now out of the hands of exporters. If the exchange hpd been increased at the start of the season the primary producers might have received some benefit. If the farmers were to be given something extra by way of exchange, it would have to be taken off someone else. No good purpose would be served by going for any patch-up remedy. In his opinion they were on wrong lines and should tackle the reform of tlie currency and credit systems. Dangerous Repercussions. 1 Mr. H. O. Mellsop, of Auckland, said he did not think the proposal would get them anywhere. If the rate were forced up as suggested there would probably be dangerous repercussions. As Mr. Begg had pointed out, some time ago they were advocating a free exchange, and because it had now gone against them they wanted it pegged. They should at least be consistent in their attitude. The major issue of monetary reform was the question they should consider. Regret was expressed by Mr. J. D. Hall,, of North Canterbury, that the resolution was not accompanied by some reference to a central reserve bank. He did not see how the distribution of any benefits could be arranged without such a bank. There should be some adjusmtent of tariffs to conform to the spirit of the Ottawa Agreement. ■ ' Mr. R. H. Feisst, of Cambridge, said he looked on the exchange as an expediency that would have to be accompanied by lower interest rates and costs generally. Any little help to the primary producers, although it might not bridge the gap, must inevitably be for 'their welfare. Mr. H. Bond, of Bainesse, said they should aim at bringing costs down to a level where they could .meet their obligations with the prices they were receiving. That was the root of the whole trouble. Inflation Advocated. The opinion that straight-out inflation was the only solution was expressed by Mr. J. Boyce, of Glen Oroua. He advocated a New Zealand note issue for use in the Dominion only. Mr. Colin Mclntosh, of North Canterbury, contended that a higher exchange would give the farmer a certain amount of benefit. It would be a little harder for the importer, but perhaps the tariff could be adjusted to meet that position. The banks could look after themselves. It might be necessary for the Government to guarantee to take any surplus exchange from the banks, but it was the biggest purchaser of exchange. A higher exchange could be the -means of helping the farmer to meet his current debts. Mr. Neil Campbell; of Manawatu, said the Dominion could not compete with Australia or the Argentine with the exchange at its present rate. Unless a change were made they would find that those countries had captured the whole of the British markets. Comment by Mr. Polson. Mr. Polson said there was a direct ratio between exports and national income. One-fifth of the national income went in taxation. A rise of 15 per cent, in the exchange would create a rise of £12.000.000 in the national income. In Australia goods were cheaper to-day than in New Zealand, while costs in the Commonwealth were falling to a greater extent than in the Dominion. It was true exchange was only a palliative, but unlike general inflation it applied the remedy where it was most needed. A higher exchange was undoubtedly a form of inflation, but at all events it was a form that could be controlled. In replying to the discussion, Mr. Begg said some of the opposition had been on the ground that the measure of relief was not sufficient, and something more radical was needed. In his opinion farmers would be wise to take any help they could get. Mr. Wilkinson had raised the question of the Government taking the responsibility for the losses that might be incurred by the tradng banks. He believed the Government could undertake a large portion of the responsibility at practically no ultimate cost. Exchange was the cheapest way the

Government could assist the farmer. Others had said that the farmers’ creditors would reap any benefit of an increase in exchange, and that the farmer would get nothing at all. Surely the farmer wanted to liquidate his debts. If that were done it would improve his position. There was no doubt that increased exchange was straightout inflation,’but why should they be afraid of that? It was one way of getting prices up to the .1914 level. The resolution was then put to the meeting and carried. REDUCED TARIFFS Producers Desire Substantial Margin for N.Z. FREE TRADE OBJECTIVE By a large majority, the New Zealand Farmers’ Union meeting agreed to the proposal, “That there should be an immediate substantial reduction in New Zealand's existing tariff rates, particularly with the Mother Country and the rest of the Empire, and that the policy of the Government should be to effect gradual periodic reductions in those rates until Empire Free Trade is realised.” Mr. H. O. Mellsop (Auckland) in moving the motion, ■ said that tariffs were an impossible burden. It had been estimated by economists that they added from 17 to 20 million' pounds to the community’s burden at the present time. The question was one of tlie most important matters that the meeting had to deal with. In seconding, Mr. R. S. Chadwick (Hawke’s Bay) said that ships were coming out in ballast simply because we were not traduig to the fullest extent with the people whom we expected to buy our produce. Sooner or later the position would have to be faced. Mr. C. Mclntosh (North Canterbury) said that New Zealand was under no obligation to take from Great Britain goods that she could manufacture herself. A substantial reduction in tariffs would be a direct hit at local industry. Mr. J. Begg said that the New Zealand farmers had to recognise that there would be a steady pressure from agricultural interests in Great Britain. Farmers there would use their whole political influence to prevent goods from other countries coming in free. New Zealand had had free trade from Great Britain since the country had been established, but had not been very grateful. The Dominion had put duties against articles from Britain, and had always had proper industries, but they had been supported by sound industries. To-day, however, primary industries did not stand on their own feet. “Practically every primary industryin the country to-day is a pauper industry,” Mr. Begg declared. “There is hardly an industry in this country that can stand on its own feet.” New Zealand would have to gradually reduce the duties on British goods until the Dominion had free trade with Great Britain, and he did not. think that Britain would be satisfied with less. There was no reason why the secondary industries should not stand on their own feet like those of Great Britain. They had the advantage of .13,000 miles of sea, which was a very high protective tariff for any industry to enjoy. STATE EXPENDITURE “Budgets Show Increase” DEPARTMENTAL CONTROL “The Government should set an example to the people,” said Mr. J. D. Hall, in moving a motion “That Government expenditure which had not been reduced during the last three years be now definitely brought down to an amount which the Dominion can afford to pay.” The motion was carried unanimously. Mr. Hall said he had studied the Budgets for the past three years, and they had shown that instead of there being a reduction, there had been a slight increase. The Government had been making many unnecessary payments which came to a huge total. It was noteworthy that the second half of tlie Economy Commission’s report had not been put into effect. Mr. Hall blamed departmental control for the increase and said that the position was one which the people could not possibly bear much longer. Another speaker said that in the event of an inquiry it should he conducted by outside commissioners in preference to departmental officers who would not apply the axe wherq it was most needejlThe meeting also passed a resolution that rating relief, either by way of bonus or by way of petrol taxation funds should be given to all rural lands as a preliminary step toward the complete derating of farm lands for reading purposes. Other proposals on the agenda paper included a request to the Government to explore the possibilities of new markets in the East, in Central America, and on the West Coast of South America, ami another motion that legislation be provided to give the court, on the recommendation of the Adjustment Committee, power to review both principal and interest in dealing with vendor mortgages when deciding applications for relief, were referred to the executive. The motion, “That a mission be sent to Great Britain to arrange for conversion of New Zealand loans, to lower interest charges,” was similarly dealt with. Mr. W. Machin, the principal speaker, briefly addressed the gathering. He agreed that we should go to Great Britain for the reduction of the rate of interest, but we ought to put our own house in order first. LOWER INTEREST Urged Upon Government BURDEN OF FARMERS After hearing the mover and seconder, tlie meeting passed a motion “That the Government be urged to bring interest rates in New Zealand down in conformity with reductions in other-parts of the world.” Proposing the resolution, Mr. H. Seifert quoted returns showing that interest formed an oppressive proportion of farming costs. In seconding the motion, Mr. A. E. Harding (Dargaville) said that a substantial reduction in interest would give more immediate relief than any of the other proposals being considered by the meeting. New Zealand had about the highest rate in the world,

and there was plently of room for a reduction in this country. “In the hands of the Government is a power which could give relief to a very great extent from the trouble we are in.” Mr. Harding said, “The reduction would benefit every section of the pepole, except those with money on fixed deposit.” SEEKING WAY OUT Two Remedial Schemes Outlined to Farmers INTEREST AND TAXATION Two schemes toward the solution of the farmers’ difficulties were put before the meeting of primary producers which was held yesterday. Mr. C. A. Wilkinson, M.P. (Egmont), expounded his scheme, details of which have already appeared in “The Dominion,” ami Mr. W. B. Fletcher (Wairoa) outlined the remedial measures which lie thought ought to be taken. “It is imperatively necessary that most drastic steps should be taken to relieve what is rapidly becoming an intolerable position,” said Mr. Wilkinson. “I am of opinion that nothing short of almost revolutionary measures will do what is required, and the country will, I am sure, respond if the proposed steps are considered to be a satisfactory solution of our chief difficulty.” Interest and Taxation. Interest, rent and taxation, under to-day’s prices, constituted a burden which made farming unprofitable, and in the end would tend to general decay, loss of production, stagnation and default, Mr. Wilkinson said. Mr. Wilkinson’s scheme provides for the freeing of all farm lands from mortgage liability and for all farm lands over and above what was considered a reasonable area to lie resumed by the State without payment for further settlement purposes. “These drastic steps would .place the primary producer in a position to compete with any country in the world, and would do more to rehabilitate the country than any other proposal yet suggested,” Mr. Wilkinson considered. “The main feature of my scheme is that I propose to bring money values into line with production values. Mr. Fletcher’s Scheme. Putting forward his scheme, Mr. Fletcher stated that any form of palliative at the present time, however desirable, would not permanently restore allround confidence —the first essential toward a sound recovery. He said that most of the valuation of farm lands have been based on the speculative value paid for similar laud in each locality, and not. upon the productive value. This method of inflating the producing lands had contributed very largely to the present position. An immediate revaluation was therefore necessary. This valuation would be made by the occupier or owner on a special declaration form, which would contain the necessary information regarding the farm's operations and carrying capacity. The valuation would be based upon a gazetted price level for all primary products, and would stand gqod for seven years, at the end of which time another valuation would be necessary. Various checks would bo provided, and in all cases where the present mortgage exceeded the declared value, the mortgagee 'would be given negotiable interest-bearing bonds. A provision would be made that no legislation should interfere with existing mortgage contracts, but they would be adjusted allowing registration up to the declared value. The whole scheme would be managed by a realisation trust board, which would arrange all adjustments, issue valuation forms, collect sales tax. attend to bond interest payments, and redeem bonds from time to time as the funds permitted, Mr. Fletcher said. The personnel of the board would be completely independent of political control. GOVERNMENT POLICY No Statement on Exchange Statements are being made in the city with much persistence that the Government, in searching for a means of assisting the primary producers, is giving serious consideration to the advisability of securing an increase in the rate of exchange New Zealand ou London to 25 per cent. Confidence is expressed by certain interests that the agitation for an increased rate will be successful. Questioned on the point yesterday, the Prime Minister, Rt. Hon, G. W. Forbes, deelined to discuss Cabinet’s deliberations. He stated the country would be advised of the details of the policy being framed in due course, but be was not prepared to make any advance statements. . INCOME TAX WANTED Primary Producers’ View Proposing “that land tax be abolished and that income tax be substituted for it,” Mr. W. B. Matheson asserted that the principal of class taxation such as the land tax was wrong. The land tax imposed a handicap on anyone trying to earn a living on the land, and the result of the imposition of a special tax on those who took up land was to hit at these who were making the best use of the country. The motion was carried.