FINDING A SOLUTION

Evening Post, Volume CXV, Issue 13, 17 January 1933, Page 8

FINDING A SOLUTION

DIFFICULTIES OF THE FARMER

HIGHER EXCHANGE DESIRED

PRODUCERS HOLD VARYING VIEWS

Economic problems facing the country in general and the farming community in particular were discussed at a meeting held in the Conference Hall of the Dominion Farmers' Institute to-day. The meeting was arranged by the New Zealand Fanners' Union, but invitations were extended to representatives of other sections of the community. Commercial interests were represented, and several members of Parliament, including four Labour representatives, were present. A comprehensive agenda paper has been arranged, and it is anticipated that the deliberations will last all day and possibly extend into to-morrow. The president of the New Zealand Farmers' Union (Mr. W. J. Poison,' M.P.) presided, and those present, apart from members of the Dominion executive of the union, iucluded Mr. James Begg, of Dunedin, Mr. G. Shirtcliffe, of Wellington, Mr. C. A. Wilkinson, M.P. for Egmont, Mr. P. Fraser, M.P. for Wellington Central, Mr. C. H. Chapman, M.P. for Wellington North, Mr. R. Semple, M.P. for Wellington East, Mr. R. McKeen, M.P. for Wellington South, Mr. R. A. Wright, M.P. for Wellington Suburbs, Mr. Stronach Paterson, of Wellington, Mr. W. Machin, of Christchurch, Mr. W. S. Bennett, of Wellington, Sir Alexander Roberts, of Wellington, Mr. A. 0. Heaney, secretary of the Associated Chambers of Commerce, Dr. R. M. Campbell, private secretary to the Right Hon. J. G. Coates, and others. The main subject of discussion this morning was the exchange problem, a motion suggesting that the rate should he raised to a point at least equal to that of Australia and Argentine competitors being carried by 35 votes to 7. v

On the question ■whether the meeting should he open to the Press, Mr. Poison said that personally he thought it would be better to have the discussion in committee. Mr. H. Bond: I think that in the interests of the community in general the people of the Dominion should be told of the desperate nature of our plight. Wo have nothing to hide, surely. , "Are the representatives of the Associated Chambers of Commerce to bo allowed to speak?" asked one of those preseat. .'■■ . ;. On receiving an affirmative answer from Mr. Poison, the speaker urged that the meeting be held in committee. A show of hands was taken, and Mr. Poison announced that they were practically evenly divided. There was a difference of one vote, ho said. "I would ask you to give the matter a little more consideration," said Mr. Poison. ."I think some of the things that ought to be said will not be said if the Press is present." A fresh show of hands was taken, and by 21 votes to 17 it was decided to allow the reporters to remain. BENEFIT FOE ALL. Mr. Poison, in opening the proceedings, said the object of the meeting was to assist the Government, which was distracted by many grave difficulties and which had all classes of the community to consider. They did not desire to go in for destructive criticism, although they naturally were mainly concerned with their own difficulties. . However, any plan they might evolve should be of benefit to the community as a whole. Mr. Polson said the farmers did not wish to suggest that any section of the community should be spoon-fed. The good times through which the country had been passing during the past few years had created, a psychology which had resulted in undue extravagance., He believed it would be necessary to undertake further economies in New Zealand and that further economies were possible. At the same' time he did not think the farmers should suggest anything that was going to. impose undue hardship on other sections of the community. He thought it would be generally agreed that the farming community had played its part during the depression and had, to a remarkable extent, endeavoured to counter the decreased value of production with increased volume of production. At the same time the farmers' capital margin had disappeared in many ■ cases. He estimated that in the last few years the farmers had lost the staggering sum of £200,000,000. He was aware of many small farmers in backblock districts who were Buffering to a greater extent than even the unfortunate unemployed in the cities. Many small farmers were living in want and destitution, but their plight was not generally known because they were in the back country. It was his belief that the people in the cities now realised that their recovery and prosperity depended on the, recovery and prosperity of the farming community. COMPOUNDING WITH CEEDITOES. Mr. Poison, went on to say that it was the British way toipay debts, but lie was convinced that unless something were done to help the country on the road to prosperity it wotild be necessary for us to compound with our creditors. If New Zealand did everything possible to help herself, then she could not be blamed if it became necessary to do that. It had to be Temembered that any plan they could evolve could only, deal with internal conditions; they were hopelessly unable to do anything to control external conditions. Ho suggested that there were four problems that could be dealt with:— / (1) High interest rates. (2) The crushing efiect of high taxation. (3) High costs. (4) The Teduced purchasing and tpending power of the community. Mr. Poison declared that if they could Temove some of those handicaps they would undoubtedly create employment in New Zealand. The position of the farmer would not be improved so far as the external markets were concerned, but his handicaps would be reduced and he would be enabled to carry on until the TCturn of prosperous conditions. HIGHjEE EXCHANGE URGED. The first proposal submitted to the meeting was:— That the exchange rate be raised to a point at least equal to that of Australian and Argentine competitors. : In moving .this, Mr. James Begg referred to the beginning of the exchange agitation, and said that to-day those who were demanding free exchange nine months ago were seeking pegged exchange, while those who had advocated a pegged exchange were asking for free exchange. In his opinion, some arrangement of the exchange was absolutely essential. In, Australia, with* the existing exchange rate and the Paterson Scheme, butter exports were increasing by leaps and bounds, and the New Zealand producer was going to fi^nd it very difficult to keep up his exports in face of such competition. It might become impossible. Under such, conditions the farmer was going steadily down, and in those cases where farmers were carrying on it was very largely at the expense of improvements and iho welfare of the land. RESTORING PURCHASING POWER. City values would inevitably come down to a degree equal to that of

fanning property, Mr. Begg continued. The'only hope for the city industries was a restoration of purchasing power for the farming community. The gap could bo bridged by a process of wholesale unemployment, bankruptcy, and suffering, but was it right to go through such a process, which might even upset settled government? The raising of the exchange to the Australian level would not put .the farmer- on his feet, but it would be some help to him. It would be only one of many necessary things, but it would be a big factor. Mr. Begg said he was wholly in favour of a free v exchange if they could get it, but. free exchange presupposed free exchange of goods and services. The process of rehabilitation must be accompanied by a drastic reduction of costs and probably a further reduction in interest. Nothing could keep interest down until tho Government refrained from borrowing and prevented local bodies from extravagant borrowing. There were many aguinents against a raising of the exchange, one of which was that it was artificial interference. Admittedly it was, but such artificial interference was taking place daily, and would', continue to take place. For any Government to ignore economic and currency matters seemed to bo at least doubtful wisdom. The- British Government had interfered with the exchange, but to what extent he did not know. At any rate, it had put aside a huge sum to keep exchange where; it wanted it. There was every reason to believe that the inonoy had been used to keep exchange high.> "These questions, are nowso important that I don't think it is right for any Government to say these are matters for somebody else and not for it to deal with," Mr. Begg concluded. "In my opinion, raising the exchange will be only an amelioration. It is not- going to save the situation, but it would give the farmer some hope to carry on until prices rise. In this country all of us have been pimply gambling on a rise in prices for primary products. We have been at it for^ three years now, and we have ao right to gamble any longer." DISTRIBUTING INCOME. The motion was seconded by Mr W Machin, who described himself as a' very inadequate substitute for Mr David Jones. He said that the value of the external trade of the Dominion was 10 per cent, less than in 1914 but? the volume of production was nearly 100 per cent, greater. The adoption of tlie motion, would not solve all their problems, but it would go part of the way. New Zealand had lost £23,000,000 of its national income, and their problem was to endeavour to distribute as between one section of the community and another the income that yet remained to them. There were many people who were better off to-day than they were before the slump;, there were many people who were just as well off: and there were others who were very much worse off. Mr. Machin said tha"t one of the most important reports that had teen submitted to the Government was that of the economists, but unfortunately the addendum of the New Zealand' Treasury was more widely read than' the conclusions of the economists. Subsequent events had shown how puerile 'ana short-sighted that addendum was; The Secretary to the Treasury had urged some other method of overcoming difficulties of the farmer, ■but that other' method had not been found yet. He' did not think they had any reason to be afraid of tackling the exchange:' ' Mr. p. A. Wilkinson, M.P. for Egmont,said he was opposed to the arguments of the previous speakers. If they lifted the rate of exchange, who was going to buy, it? High exchange had been introduced in Australia for the purpose of checking imports, but in New Zealand exports exceeded imports. If the exchange were raised to £125 the banks would be left with the baby. • The only way to raise the exchange-in New Zealand would be for the Government to guaranteo the banks against loss, and that would mean that the burden would bo thrown back on the people. A high exchange would also impose ah additional tax on British goods coming into New Zealand Mr..E..8. Talbot (Hawkes Bay) considered that the exchange question should have been decided twelve months ago, .when some benefit might have accrued .from.a higher rate. At the present time the. bulß of this season's exports, had .passed from the producer to the exporter, and by the time New Zealand -could -benefit there would be another export season in progress. Rais-' ing the exchange mould not solve the problem. The essential thing was to tackle currency and credit reform, and the proposal was .only, a .temporary expedient. Mr. H. Bond (Bainesse) said they should aim at bringing costs down to a level where they could meet their obligations with the prices they wero receiving. .That was the root of the whole trouble. STRAIGHT-OUT DEFLATION URGED. Straight-out inflation was tho only solution he could sec, said Mr. J. Boyce (Glen Oroua). He advocated a New Zealand note issue for use iv the Dominion only.

Mr. C. Mclntosh (North Canterbury) maintained 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 bo adjusted to compensate. The banks could look after themselves. It might bo necessary for the Government to guarantee to tako any surplus exchange from fhe banks; but it was the biggest purchaser of exchange. A 'higher exchange would at least be the

means of helping the farmer to meet his current debts. • Mr. N. Campbell (Manawatu) said that the Dominion could not compete wtih Australia or tho Argentina with the exchange as it.was at present. One clay, unless there was a change, they would find that those countries had captured the whole of the English market. FORMER PRINCIPLES. Mr. H. O. Mellsop (Auckland) said he thought the Farmers' Union should adhere to its former principles'regarding free exchange, and should seek some monetary reform which would give reasonable help to the man oil the land. , Mr. J. D. Hall (North Canterbury) said that if the exchange was pegged at 25 per cent, it would not te easy for tho ordinary farmer to get the benefit. He regretted 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 adjustment- of tariffs to conform to the spirit of the Ottawa agreement. The proposal meant an increaso in tariffs and seemed to .offend tho principles of the Ottawa agreement. The raising of the. exchange would be only a bridging policy, and would have, to be accompanied by lower interest rates and costs generally, said Mr. K. H. Fcisst (Cambridge). , Tariffs should be reduced'in proportion to the increase in exchange. r REMEDY WHERE NEEDED. An increase in exchange was undoubtedly a form of inflation, said Mr. Poison, but at all events it was a form which could be controlled. Straightout inflation • had led to disaster in other parts of the world. In any case, it could only affect local prices. Only a limited proportion of what was produced in New Zealand was sold within the country. Mr. Poison said that to-day in Australia goods were cheaper than in New Zealand. It was clear that in Australia costs were falling, to a greater extent, at all events, than in New Zealand. A higher exchange was, of course, only a palliative, but, unlike straight-out inflation, it would apply the remedy where it was most needed. An increase even to 30 per cent, would only mean an increase in costs of 4 per cent. "CHEAPEST WAY TO ASSIST." Mr. Begg, in reply to criticism of the proposal, contended that raising the exchange would bo the cheapest way for the Government: to assist the farmer. It had been said that the farmer would not get enough, and, that his creditors would get all the benefit/but surely the farmer wanted to liquidate his debts if he could. It was inflation—there naa no doubt about that, but why should they be afraid of that? •' It was one way of getting prices back to the 1:14 level. ' ■ Tho motion was carried by 35 votes to .7-. TARIFF" REDUCTION. ' The next proposal, was as follows:— "That there should be an immediate substantial reduction in our existing tariff rates, particularly with the Mother Country and the rest of the Empire, and that tho policy of the Government should be to effect gradual periodic reductions in those . rates until Empire free trade is realised."

Mr. Mellsop moved the resolution, expressing .. tho opinion that tariffs constituted an impossible burden. It had been estimated that they represented an added cost of 17 to 20 millions at the .present time. Tho question was one of the most important matters to .be dealt with. Mr. E. S. Chadwiek. (Hawkes Bay) seconded the resolution, saying that sooner or later the position would have .to be faced. At present it was out of all proportion to the circumstances operating both in Now Zealand and in England. ■ . ' In regard to the decline in.imports from Home, Mr. Mclntosh said thai New Zealand was under no obligation to take from Great Britain what she could manufacture herself. A substantial reduction in tariffs would be a direct hit at the local industries. It was suggested that the %vords "substantial" and "particularly'? should be deleted so as not to embar^ rass local industries. The process should be a slow one to enable adjustments to be made. When the meeting resumed after the luncheon adjournment Mr. Begg said they must recognise that there was a steady pressure from agricultural interests in Great Britain to have 'a duty imposed upon New Zealand produce. Now Zealand herself had not been particularly grateful to th,e Mother Country in the matter of duties. The Dominion had always had pauper "industries, and the sound industries Jiad supported them, but where were ' the sound industries now 9 They had to get back to the point' where every industry could stand on its own feet.' There wa? no reason why there should not be ■ a substantial tariff reduction. Gradually the duties on British goods should be reduced, until there was free trade with Great Britain, and Ire did not think that in the long run Great Britain would be satisfied with less. He saw no reason why the secondary industries in New Zealand should not stand on their own feet as they did at Home. The motion was carried by a large majority. (Proceeding.)