EXCHANGE ISSUE

Dominion, Volume 26, Issue 182, 29 April 1933, Page 10

EXCHANGE ISSUE

Mr. E. Salmond’s Criticism REPLY BY MR. COATES Further Wage-Cuts Avoided Statements made a few days ago by Mr. Edwin Salmond, on behalf of the New Zealand Importers’ Federation in connection with the exchange issue were replied to yesterday by the Minister of Finance, the Rt. Hon. J. G. Coates. In terms of its arrangement with the banks, said Mr. Coates, the Government had taken over surplus London funds, lint these funds had so far not exceeded the amount needed to meet the Government’s ordinary interest requirements in London. "My attention,” said Mr. Coates, “has been directed to a newspaper article by Mr. Salmond, who purports to speak on behalf of Hie New Zealand Importers’ Federation. Most of his comment, more or less related to the recent adjustment in the exchange rate, is of an extravagant kind that carries its own condemnation, and it is needless for me to take notice of it “I do not know how far Mr. Salmond thinks he Is voicing the opinions of all importers. But I am certain of one thing: a great number of men in that class, many of them men who were reluctant to approve of the exchange adjustment but who recognised that something had to be done, do not agree with his attitude. They have personally expressed approval to me; many have written to the Government in terms of approval. The Ottawa Agreement. “Mr. Salmond repeats the baseless assertion that by our action in sustaining purchasing power we have infringed the Ottawa Agreement. We have not. It is true that New Zealand’s imports from the United Kingdom and from other sources have fallen, but any fair-minded controversialist should see the reason for this. The fail, which was in evidence before the exchangerate was raised above 110, was not due to that rate. It was clearly due to lack of purchasing ability in this count ry. "Then the statement is made that the benefit of the exchange rise is confined to 'a strictly limited number of well-to-do farmers while others have merely paid or reduced their debts. Is not a farmer who has paid his debts or has even reduced his debts better off on that account? Yet Mr. Salmond avers that such a person lias received no benefit. “Even more flagrantly untrue is the assertion that ‘uminiployment lias increascrl.’ The truth is that the registered unemployed in January totalled 67,865. The latest return shows a total of 66,653. “The mis-stating of figures is not helpful; it merely suggests that there is u bad case to be supported. So it is with the extravagant statements as to the loss to the Government on account of the exchange rate. Tlie latest estimatt’ (Mr. Salmond’s figure) is £8,000,000. The truth is that in terms of our arrangement with the banks the Government has taken over surplus London funds, but these funds have so far not exceeded the amount needed to meet the Government’s ordinary interest requirements in London. Prices For Produce. '“Had the Government not meddled with the exchange,’ Mr. Salmond is reported to have said, 'the rate would now be about par.’ What further demonstration could be wanted of the wisdom of our action? Prices of our exported products are to-day disastrously low. Sevenpence a pound for butterfat in New Zealand currency with the adjusted exchange rate is equivalent to SLI. in sterling: 6d. here represents only 4Jd. in sterling. Our farmers today are in an exceedingly difficult position. If we were confined to sterling prices the disastrous course of deflation would have brought them still lower. “Air. Salmond’s contention in substance is that wo should have allowed deflation to take its course. This would inevitably have meant furthaicuts in wages, salaries, and other expenditure. “Unhappily,” said Mr. Coates, in conclusion, “economic events abroad took a turn for the worse in recent months and weeks. As a result, the adv,antage of our exchange adjustment lias not been shown in an actual rise in the New Zealand currency value of our exports. It has taken the form of averting still further deflation. But no person who looks calmly and intelligently at the facts will fail to see that tlie benefits are there."