EATE SHOULD BE RAISED

Evening Post, Volume CXIII, Issue 141, 16 June 1932, Page 12

EATE SHOULD BE RAISED

DR. BELSHAWS ADVOCACY

(By Telegraph.—Pi-ess Association.)

• AUCKLAND, This Day. Declaring that the process of economic deflation in New Zealand is still far'from complete- and that-as a policy it is fraught with extreme danger, Dr. Belshaw, in addressing ■, the Economic Society, urged that the exchango rate should be raised to not less than 30 per cent, and maintained at that level until overseas prices became more stable. •

In emphasising the gap which still, existed' between export prices and internal prices, Dr. Belshaw said that oUjthe basis of 1928 the continuance of deflation, would require further reductions in award wages of, say, 30 per cent.,and in interest and rent of,say, 20 per cent. Nevertheless, the burden of' fixed charges and taxes would still remain unduly heavy, and a continued fall in internal prices would result in the persistence of low profits, or no profits and heavy unemployment, Further, the Government's adjustable expenditure would require to be reduced from fourteen millions to four millions. Clearly the Government would be faced with an impossible task in balancing the Budget at such a. level- of national income.' It would be unwise to expect relief from a rise in export prices.He added that lie expected, tho exchange rate to go up whensthe pool was abolished and suggested that an exchange control board be set up as a preliminary to establishing a central bank. ...-.._: .