Evening Post. MONDAY, JANUARY 16, 1933. SHORT-CUTS AND DANGERS

Evening Post, Volume CXV, Issue 12, 16 January 1933, Page 6

Evening Post. MONDAY, JANUARY 16, 1933. SHORT-CUTS AND DANGERS

A meeting, called by the New Zealand Farmers' Union, will be held tomorrow to consider the financial and economic difficulties' of the primary producer. Great impprtance will attach to the deliberations of the representatives of various branches of farming who attend, for they meet at a critical stage in the country's history. The position is difficult-^so difficult that' there may be a temptation to resort to perilous remedies. The very difficulty of the position multiplies many times the risk of disaster attending on the application of rash measures. Because affairs are critical there should be greater caution in the adoption of doubtful and dangerous expedients. A false step might'quickly convert great difficulty into greater disaster and reJard by months and even years the painful process of recovery. The first and greatest danger which the country, and particularly to-mor-row's conference, irtust avoid is that :of-viewing,the issue from one angle alone. There has been much of this in the past and it has been a hindrance to the solution of the country's problems. It has been excused by .such statements as: "If the farmer prospers the whole country prospers," "The farmer is the backbone of New Zealand," "The farmer's exports^pay our overseas debts and imP°rts "—all Partly true, but all capable of erroneous interpretation. It is quite wrong, for example, to suppose that prosperity assured to the i farmer by subsidising him at the expense of the rest of the community can return an equivalent measure of prosperity to the community, or be anything more than shortlived for the farmer himself. The means and the permanence must be taken into" account; just as they must be taken into account when we seek to follow the advice of others who say "Foster secondary industries."

A second great danger to be guarded against is that which comes from the temptation to take short-cuts. There is an old proverb which says: "The longest way round is the shortest way home." This has a direct application to the present position. If an attempt is made to cut across economic laws and to set at naught the principles which govern business, the whole community may be plunged in a deeper morass of difficulty. Let there be no mistake. If there is a compromise with principle the price must be paid. We have seen that already in the consequences of interference with contracts, wrecking confidence, and the demoralisation1; of business by two attempts to impose a <high, exchange upon the country. • ; It is sufficiently'difficult now* to inspire the community with a little hope and a small measure of confidence. If the farmers concentrate their attention on proposals which will weaken still further the faith, of the public any temporary benefit will be more than offset by the demoralisation and disturbance of trade. ;

A great rests upon the representatives of the farmers. Even by advocacy of unsound methods they may cause alarm. But a still greater responsibility lies with the Government, which musty finally decide the course to be pursued. Public opinion is sensitive, and a false move may do almost irreparable harm. Even now there is uneasiness due to.persistent rumours that the exchange issue is not finally settled, that attempts have been made to in- I duce Government reconsideration of its twice-declared policy, and that the Government is wavering. This should be dealt with by the Prime Minister clearly, immediately, and decisively. We need hardly say how damaging and dangerous adoption of a high exchange would be now. Twice it has been rejected by the Government and by banks (with one exception). On the last occasion Mr. Forbes declared without any possibility of misunderstanding that the Government would not intervene. | The question of exchange (ho said) is entirely one for the banks. . . . It is for them to decide- what is the best cpurse for them to adopt in the interests of Bound banking and of the country. • The Bank of New Zealand was equally clear in its statement of a sound banking course. It is not the business of the- banks (the board declared) to adjust exchange rates to meet variations in tho price of produce, nor should the banks bo influenced by the rates prevailing in other countries, but by tho supply and demand of money between London and New Zealand. The board fully realises the difficulties confronting tho primary producers at the present time, but it is satisfied that the raising of the rate of exchange under existing conditions while it might be a palliative, would not be in the best interests of the Dominion, and the board is therefore not prepared to depart from sound banking for the- sake- of expediency.

In the light of this statement and of the undisputed facts of the trade balance, a high exchange could be introduced only artificially and by political interference with banking policy. Early last year the farmers' representatives were opposed to such a course. They wanted free exchange, and were indignant when it was asserted that they sought high exchange—whether free or pegged. Recently some, have been more candid arid have advocated a high rate by pegging. Yet all are not bent on this perilous course. Mr. Good-

fellow in a speech at Whangarei recently said:

What was required was not an artificial inflation of currency or an increased exchange rate, but a drastic reduction of farming" costs. An increased exchange rate might have been helpful eighteen months or two years ago, but tbo country had now gone too far. The depression was nearly over and New Zealand would recover sooner without an increased exchange rate. Exchange inflation now can be introduced only by flouting economic laws, in opposition to wellinformed banking advice and by deliberate and inexcusable breach of faith on the part of a Government which has pledged itself unequivocally to refrain from interference. Such a cpurse would be attended by most disastrous consequences. It would shatter what remains of public confidence, for what reliance could then be placed upon the steadfastness and good faith of the Government? What assurance would the public, have that their welfare would be considered when expert advice was disregarded and political expediency dictated the policy? But even more disastrous would be the inevitable division of the community, with conflict instead of co-operation and such dissension that the h'ardwori measure of unity so far attained would be most seriously imperilled. Above all tilings New. Zealand needs' national unity. Difficulties which' cannot be overcome by a divided nation would be sur-mounted-by a people with one aim, one mind, , and a determination to organise for victory. This national spirit, cannot be fostered by policies of vacillation and expediency. There must be a Government strong enough to meet sectional pressure and to replace it by a determined leadership in the national interests.