THE EXCHANGE RATE

Evening Post, Volume CXVIII, Issue 114, 10 November 1934, Page 8

THE EXCHANGE RATE

I (To the Editor.) Sir, —In your issue of Tuesday, 6th inst., you print a letter for "G," of Nelson, giving a quotation, from !the '' Economist of August 111 opposing our exchango polity. The article in question lead as if contributed, by a coi respondent and probably did not represent the editorial opinion (Sir Walter Layton). This is probably better represented by a note in the "Economist'/ (pages 529 and 530 of September 22 last) on monetary dissensions' in Now Zealand, and the following is an extract: — ; "The main leport is undoubtedly right in attributing the New Zealand depression primarily to the fall in world prices. It is equally, right, - however, in urging that a country which is dependent, like New Zealand, on a few primary products' can do something by monetary policy to lessen the shock of falling prices. In such circumstances an alteration in the exchange rate is easier, quicker, and more equitable than a reduction in costs. But the depreciation should not proceed further than is necessary to adjust export prices to the existing level of money costs. Nor should the volnme~ of credit and currency be inflated beyond the-point which is appropriate to the new 'exchange rate. A 'raising' of the New Zealand exchange beyond the present level would almost certainly be excessive."—l am,..etc., j ROBERT A.' WILSON. Letherby Bosh, Canterbury.