DEFENCE OF EXCHANGE

Evening Post, Volume CXVI, Issue 73, 23 September 1933, Page 8

DEFENCE OF EXCHANGE

(To the Editor.)! Sir,—l thnnk you for the prominence you gave to my latter and for your answers which, hort'ever, could not satisfy any supporter of high exchange. While recognising that I cannot hope to convince any of your readers through, tile correspondence columns I feel I must answer two of your arguments. First, you say that , "exchange depreciation does not bring more money into the country." (It has never' been claimed that it did) "but forces some sections —taxpayers, 'importers, and consumers — to provide a bonus for., exporters." Now is this bo? Mr. Coates, as quoted by you, says that the "primary producer has benefited'—not. out of the pockets of the community but through, inflation—to •'the extent of £5,300,000." If so, where has that money gone? Clearly "to the towns, Where else could the farmer spend it? It is true that the same inflation has raised the price of imports to all consumers, but these having come into possession of £5,300,000 wherewith to. meet the added- cost rib section is Seriously victimised. It is true that the salaried man making a purchase of an imported urticle cannot see. wherein iiis purchasing power is increased by1 the exchange inflation; but he must think in terms of his class/ Had Mr. Stewart's deflationary policy been pursued long chough very few salaried men.would have been left '■ill their' jobs. Deflation jb accumulative: Only those who have been retrenched realise the power and cruelty of that course. Better to 'pay a higher price for. your luxuries than eiiter the ranks of the unemployed. : , Secondly, there is the- statement^ that Mr. Stewart (the Government if you like, but everyone knows, better) pooled our export credits "in order that New Zealand might. not default in her external payments," or in other words "to make it easier for the Treasury to meet its coinffiittherits." When the farmer has raised liis produce surely it belongs to him to sell for ite full <value iii sterling, j dollar^,yen; or1 whatever coin he chooses. And when, he lias made the deal no one, I not even the Minister.of. Finance, haa a right to say to him: "You must not take all that is yours, because I might find it hardec' to pay llijr debts." Wmtt tlie farmer- demanded then was free exchange. It was his right. If it had not been pegged against'.lilni iv 1031 it might not. have been.,net)es6ai-y to peg it iv Ms favour in 1033- :, .:> . -~ I do not claim that, coming so late, this high : eJfdtanngd Will- be sufficient to save the farming interests, nor do I consider vtliat it :fe' an ideal measure of the result of w»e financial arrangement^ but I do maintain that as an emergency meastire it has obviated a crisis which, allowed to develop, would' have had dire consequences for both town and country.— I am, etc., '■ '■ ■ \ HELEN WILSON. Pio Pio, September 17. [Wo are no more; sanguine tbfW the j correspondent of being able to "satisfy any supporter of high exohange." Experience has shown that they, are hard, indeed to satisfy. Blit it is necessary to' point out that the Correspondent has now. abandoned her earlier ■ v arguments; the alleged failure of the Press to give a fanstatement of the'qthfei* side, the Attstraliah find Danish inflations, attd the Wholly meorreot parallel of Britain's departure from the gold sttradttrdi Moreover^ "inflation," which she previously spurned a* ah editorial- tatehwOftl, is now' her' mam argumentr-"-to pioye that the riioney does not come fi'Oin thepockete of consiimerss importers, and taxpayers. But if by inflation this money has come miraculously from nowhere, where corneaNthe necessity fdl' sales tax and extra Customs duties, a'further dall oh reserves, an anticipated Budget deficit t>f over £4,000,000, and higher priced for all goods subject to exchange twd stiles tax influence? To the second contentioM that the farmer was deprived by the Export Credits Pool of something rightfuUy.'hls, there are two effective answers: (1) Tiiat if New Zealand had defaulted the farmer would have suffered ftiore than through any credits pool; (2) that there was iio real deprivation aS exchange \Va& fiied by_ the banks.at the true level. This was proved by the fact that when the pool was abolished, the banks did not- find it necessary to raise the rate.—Ed.] ' | !