FACING THE ISSUE

Evening Post, Volume CXVI, Issue 79, 30 September 1933, Page 8

FACING THE ISSUE

A good purpose has been served by Mr. R. A. Wright's amendment to the Address in Reply bringing the exchange issue directly before the House. The issue was. raised previously in the Labour Party amendment, but it was linked with so many other subjects that a cleat expression of the feeling of members could not be secured. As we pointed out in our comment upon Mr. Holland's speech, Labour condemned the exchange, but proposed to substitute other and even more dangerous forms of inflation. Mr. Wright's amendment is clear-cut and his speech was equally definite. It brought the Government face to face with the main points: the benefit de-. rived by the farmer, the cost of that benefit to the country at large, and the Government and local bodies in particular, the injustice of such sectional measures, and the means by which the cost will be finally met. We are not in a position to say how many farmers have benefited. Neither is the Government, and it has not given this information. To the assertion that the farmer's creditors have been the chief gainers, the answer has been made that this is also helpful to the country. It may be, though we cannot see where the added benefit accrues from taking money from merchants, consumers, and taxpayers to give it to, the creditors of the fanner. No Government has yet taken similar steps to secure the creditors of other persons or to save them from having to write off their debts. Certainly it is not equitable. The ultimate settlement •of the account is also raised. When Mr. Coates explained away the surplus of London credits by stating that they would be needed by a Reserve Bank on its establishment, we asked for a more definite statement of the Government's intentions and pointed out how severely it would handicap a Reserve Bank if it were loaded with such liabilities. A warning to the same effect was.made by the City Editor of the "Daily Telegraph":— The fact that the exchange must ultimately return to an economic level implies'that the Government will incur a considerable loss on its surplus holdings unless, as the official statement suggests might be done, .the sterling is finally transferred to tho Reserve Bank shortly expected to be formed. In that event, the bank itself would start with an over-valued exchange reserve—a most undesirable beginning. Mr. Wright brought this point clearly before the Minister of Finance. Up to the present no reply has been given. But a reply cannot be for ever evaded. A Reserve Bank on sound central banking lines is, we believe, desirable. A Reserve Bank as a sacrificial goat to bear the Government's exchange sins is quite another matter. A bank begun under such auspices would be political from the start. These financial implications of the exchange policy are of great moment, 1 and even more important are the far-reaching political effects. ■Mr. Coates complained recently that the Government's policy had not received from the Press the support which it should have had. He may now protest that Mr. Wright and others are endangering the stability of the Coalition by maintaining their opposition to exchange. But Mr. Coates cannot drive in a deep and wide wedge, and then blame others for splitting the Coalition and the country. The Government may whip

its followers together and carry the day. To several members the presentation of the amendment is embarrassing. Mr. Harris, who seconded the amendment, expressly stated that he was not supporting a want-of-coniidence motion. There are others who will vote with the Government though they do not approve the exchange policy. We ourselves do not wish to see the Government defeated—only saved from its politically suicidal policy. Will it be warned in time, or will it blindly persist in ignoring the growing dissatisfaction and' claim that a whip victory is an endorsement of its sectional action?