PARLIAMENT IN SESSION

Dominion, Volume 27, Issue 16, 13 October 1933, Page 10

PARLIAMENT IN SESSION

Discussion on World Conference Report

CURRENCY AND ECONOMIC PROBLEMS

Mr. Savage Makes First Speech as Leader of Opposition

Subjects dealt with in the report on the World Economic and Monetary Conference were discussed by- the House ot Representatives yesterday. The debate was inaug, 7 Z nd > s Prime Minister, Rt. Hon. G. W. Forbes one of New Zealand s representatives at the conference. Mr. For es a < d agreed that the most important function before the co "f ei ?" ce 1 •< been the stabilisation of currency. It was genera! y fe!t that until economic differences were settled there was little hope foi reduc tions in armaments. • ■ , r , r t Unvwe Members of the Labour Party have chosen Mr. M. J. Savage, member for Auckland West, as their leader in succession to the late Mr. H. E. Holland. By virtue of this appointment Mr. Savage becomes Leader of the Opposition. His first speech in this capacity was made in the late afternoon, when he dealt with economic problems in their relation to the conference. He contended the only solution of the present difficulties was to close tip the gap between purchasing power and productive power. He did not know’ why the Government would not tackle this job. Several more departmental reports were presented at the afternoon sitting. The debate on the conference report will be continued when the House resumes this morning.

THE CONFERENCE Discussion on Report LABOUR CRITICISM “Not a Failure,” Says Mr. Forbes The view that the World Monetary and Economic Conference proved a complete failure is not subscribed to by the Prime Minister, Rt. Hon. G. W. Forbes, who was the leader of the New Zealand delegation. Mr. Forbes, who inaugurated a debate in the House of Representatives yesterday on the report presented on Friday last, said it was true that the gathering achieved little of what was expected of it, but a great deal of useful and valuable work had been done. The way had been paved for a better understanding of each other’s difficulties.

to form any definite opinion the question should be referred to the International Institute of Agriculture and to the International Dairy Federation. In replying to an interjection, the Prime Minister said that the question of exchange was not raised at the conference. .The delegates recognised that each country had first to put its own house in order. Stabilisation was the goal, and the fact that the conference failed to reach agreement on the matter of stabilisation was due to circumstances over which the conference and the countries concerned had little, if any, control. “Failed to Remove the Barriers.” Mr. W. J. Jordan (Lab., Maiiukau) said the conference opened full of promise, but was held up by having to face a problem in currency. It failed to achieve its purpose. It passed resolutions concerning regulation of production and functions of central banks, but did not remove the barriers which prevented the people enjoying that measure of plenty and. comfort, which had been supplied for their use. It. was the biggest conference of its kind held within known history. It failed, and they now called upon the Government of New Zealand to state definitely what action it intended to take, and how soon, to cope with the hardship, uncertainty, and insecurity which the present system had created. Mr. W. A.’ Bodkin (Govt., Central Otago) said that a perusal of the report made it abundantly clear that the delegates as a whole recognised it was absolutely essential to stabilise currencies before there could be any genuine attempt to build up international trade and to improve substantially the world price level. It was a matter for regret that the conference failed, but one outstanding feature about the report which was decidedly hopeful was that the expert committees set up to consider the problems had done a great deal of work. There was not the slightest doubt that, as a result of the investigation, the findings would prove a basis for discussion and bring nearer an ultimate world settlement The policy of the New Zealand Government was in accord with that of the Imperial Government. Test in America. The Leader of the Opposition, Mr. M. J. Savage, said that the conference had failed to realise that prices would never rise unless the people had the money with which to buy. The Prime Minister: They are trying that in America, aren’t they? Mr. Savage said that America in the first place was shortening hours in order to enable her people to enjoy the benefit of machinery and scientific processes. Up to now the benefit had gone to those who owned the machines, and as they could not consume all they produced the result was unemployment. The Minister of Finance, Rt. Hon. J. G. Coates: If you raise prices will increased purchasing power necessarily follow? Mr. Savage said that if "the Government. raised prices and then raised wages correspondingly the position would be the same as it was to-day. The task was to close up the gap between productive power and purchasing power. There was no other solution of the- economic problem. Helpful Information. The Minister of Lands, Hon. E. A. Ransom, said that the New Zealand delegates had carried out their duties very admirably. The fruits of their labour would be seen in the future. The primary producers already realised that good work had been done on their behalf. A fund of information had been gathered in regard to conditions at Home which would undoubtedly prove to be very helpful both to the primary and secondary industries in the Dominion. . Mr. Ransom said that he was at a loss to understand what Mr. Savage meant, when he said that ‘’New Zealand had plenty of money a few years ago, but it had done the disappearing trick.” Members on the Opposition benches seemed to have the impression that money just floated about in the air, and was not put to any practical use. He reminded them that large sums had gone overseas to meet commitments. Owing to the enormous fall in the value of the country’s exportable products, money was not'available to the same extent to-day as it was a few years back.

The .Prime Minister said that disappointment had been expressed that the dmference had failed to reach definite conclusions on a number of important questions. The field to be covered by the conference proved so vast, the problems so complex, and the situation with which the delegates had to deal was so unstable, that it was not practicable to achieve immediate and definite results. The conference paid considerable attention to the coordination of production and marketing in agricultural foodstuffs and raw materials. One thing that struck him was the little support for speculative schemes, about which so much had been heard in New Zealand. A Voice: Douglas credit I The Test of Time. ( The Prime Minister said that the Douglas credit scheme, had not even been mentioned The opinion was expressed that the present system on which the finance of the world was based was the soundest. Mr. W. E. Parry (Lab., Auckland Central) : What does that mean? The Prime Minister replied it was generally agreed that the present system had stood the test of time. Not one of the delegates pinned his faith to the new scheme. The conference considered it to be essential, in order to provide an international gold standard with the necessary mechanism for satisfactory working, that independent central banks, with the requisite powers and freedom to carry out an appropriate currency and credit policy, should be created in such developed countries as had not at present an adequate central banking Institution. It had been suggested, said Mr. Forbes, that New Zealand was under the domination of the Bank of England and of financial institutions overseas. To that assertion he gave an emphatic denial. Mr. A. M. Samuel (Govt., Thames): But doesn’t that prove that they are ail under the domination of one system? Value of a Central Bank. The Prime Minister: There are some members who have an idea that we are under the domination of somebody else. I don’t know whether they feel that themselves, but speaking for the Minister of Finance, I can assure the House that we are not under the domination of the banks or financial institutions. ’ We have heard it said that our policy is determined by people outside New Zealand. A Labour Member: So It is. The Prime Minister said that New Zealand had certain obligations, and he thought it was the general desire of the people that they should be met. The conference reaffirmed the declarations of previous conferences with regard to the great utility of close and continuous co-operation between central banks. The Bank for International Settlements, it was considered, should play an increasingly important part not only by improving contact, but also as an instrument for common action. The discussions on central banking had proved very valuable, he said. It had been proved to him that without a central bank New Zealand would not be able to participate in a policy that was in its interests. Problem of the Quota. In discussing the question of quotas, rhe Prime Minister said that the problem at first occupied a comparatively minor place in the agenda. It came, however, Into a position of first importance as one delegation after another brought before the conference additional commodities in which there was alleged to be over-production. It was considered that there should be a coordination of production and marketing. Mr. F. Langstone (Lab., Waimarino): Did not the Home delegates object to the quota? The Prime Minister replied that the British representatives supported the regulation of production and marketing. The fe,eling in favour of the quota was very strong; in fact, it was much stronger than the New Zealand delegation had anticipated. Naturally the discussions on the subject were followed very closely by the Dominions. The conference agreed that as there wan insufficient data before it

The Leader of the Opposition had stated tliafc the aggregate price of goods in New Zealand could not rise higher, than the aggregate purchasing power of the people. With that view, the Minister said, he concurred. Unfortunately, purchasing power was not going to affect materially tlie value of goods. Tlie price was fixed almost entirely overseas. If. then, it was true that the aggregate price of goods could not rise higher than the aggregate purchasing power, the Labour Party’s policy of guaranteed prices was based on unsound premises. Mr. Parry: Good gracious! (Laughter.) The Minister: It is probable that we will not hear anything more about guaranteed prices. Labour members: Oh, yes, you will. Finding New Markets. The Minister said that the Government was endeavouring, as far as possible, to investigate the jiossibility of markets other than that in tlie United Kingdom. The Leader of the Opposition had suggested that a first essen-'

tial was to close the gap between productive power and purchasing power. That was quite true, but Mr. Savage had not told the House how it could be done. To say It could be done by a manipulation of the financial system was to suggest the impossible. The Minister denied that the Government was responsible for forcing down the standard of living.; The national income had fallen from 50 millions in normal times to approximately 30 millions. The Government set out some years ago to increase production. That had been accomplished. To-day, owing to the state of the world, there was no room on the Home market for the whole of the Dominion’s produce, but to suggest that the producers in this country should restrict their output was unthinkable. New markets would have to be found. Nearly everjj exporting country in the world was pouring goods into Great Britain. “Pistol Held at Head.” Mr. H. G. R. Mason (Lab., Auckland Suburbs) said that finance was an international business. The aim of international financiers was by means of the gold standard to yoke the necks of the nations together. Mr. A. M. Samuels (Govt., Thames) said he believed that so far as the quota was concerned it had been arranged at the conference that the Ottawa agreements should be set aside and that a quota on cheese should come into operation at the earliest possible moment. He believed the Prime Minister was told that; that the pistol was held at his head. Mr. T. Baxter had been sent out from England to tell New Zealand the quota was to be imposed. It was the duty of the Government to say what would be its policy when the quota came. In his opinion there was no necessity for a Ceutral Reserve Bank, and he was firmly convinced the Government was being dictated to. It was the duty of the Government. and country to insist on an inquiry into the monetary system. Mr. F. Langstone (Lab., Waimarino) said that the Minister of Lands had referred to the necessity of finding: new markets, and had suggested that the. Dominion should concentrate on the East and other places. New Zealand’s trouble was an internal one and had to be settled here.

The Minister of Lands: How? Mr. Langstone: Now if any other member had asked me that question, Mr. Speaker, I would have gone to some trouble to try to explain it. but I believe it is absolutely impossible to get tlie Minister of Lands to see any daj’lifht at all. He is absolutely past redemption so far ns any new ideas are concerned. (Laughter.) .The Minister: You are only wriffgling. Mr. Langstone said that like the Leader of the Opposition, lie believed prices could not be raised unless the purchasing power of the ;>eople was raised. He suggested that the accumulated surpluses held by New Zealand in London should be used to reduce the national debt.

The debate was adjourned until this morning.

Before commencing its business at last night’s meeting, the Wellington City Council passed a vote of sympathy witli (be relatives of the late Mr. 11. E. Holland. The members stood in silence in respect to his memory.