SAVED THE FARMERS

Evening Post, Issue 50, 27 August 1935, Page 7

SAVED THE FARMERS

EFFECT OF EXCHANGE-: RATE

MR. FORBES'S; BELIEF

(Special to the "Evening Post.")

RA.NGIORA,- This :Day;

... The belief that the action; of; the Government in : raising the exchange rate had definitely saved large sections of the farming community ffoin bankruptcy; and had" enabled > the farming industry to be carried ph was expressed by the Prime Minister: (the. Rfclloh. G. W. Forbes) in a speech.'at Rangioia last night. . ;> ; .::i. -;

Mr. Forbes said the.! effect of the Government's action had, been to^faise export receipts in terms?of New :Zealand currency, / There was" no: need to traverse the*' lengths •of tlie exchange controversy: "It was designed' to/ assist the primary producers because those industries are vitally necessary to the whole population-of this =-Bpj minion and because assistance in-some shape or form was absolutely essential if they were tp be kept going?" he said. "The first shock .-..0f ! these:,suddenly falling prices did not fall on the community as a whole, it fell pnvthe producing section only, and something clearly had to be done either by way of subsidy or by alteration in exchange to enable that section .to survive at all, bearing in mind always that the continuation of the primary industries is in every sense of the .word essential to any improvement in the welfare 16f the country as a whole.- • The alteration in the exchange rate was definitely part of the Government's, policy, of endeavouring to remove the disparity between farming prices and- farming costs. We had already grappled with the problem from the cost-side; tiow we were attacking it from tha'ppf prices. Again? by expanding : the farmers' purchasing jpower,. or avoiding further contraction, the rise in-ex-change was designed to;, check, the heavy fall in national income and in. taxation, interest, and Government revenue. The agitation against "this measure at the time was largely due to lack of understanding -of its purpose, but I think it will b,e widely admitted now, not only that the raising of the exchange has not, as was predicted at the time, produced; a; fall in imports, but that It has most' definitely . saved large sections of tlie farming community from bankruptcy and has ena"bled the industry to." be carried on.

"I would like to observe at this point also that despite the raising of the exchange and the sales tax there-has been practically no increase in the cost of living."". ■' .■".- ;