SOMEONE MUST PAY

Evening Post, Volume CXX, Issue 110, 5 November 1935, Page 8

SOMEONE MUST PAY

A while ago supporters of high exchange wer,c declaring that the issue was dead and ought to be buried. The election has proved ihem wrong. At present interest in this subject appears to be great and increasing; probably because it is realised that, if a protest be not made now, the temporary exchange inflation will be made a permanent currency devaluation. In (heir anxiety to counter the protests high exchange advocates are making loose statements ■ which cannot be allowed to pass unchallenged. One such is that great benefit has been given to farmers and that no one has suffered—in fact, that the benefit has been shared, and there has been no increase in the cost of living. There are two fallacies in this: (1) that, because the farmer spends part of the exchange subsidy on domestic goods and services it pays to subsidise him; and (2) that the cost has not been reflected in increased living costs. The first fallacy is easily exposed. Ask the shopkeeper if he considers he is benefited if he pays a pound to a customer and the customer -graciously agrees to spend part of the pound in buying the shopkeeper's goods. The assertion that there has been no increase in the cost of living is inaccurate on superficial facts and glaringly inaccurate when the facts are closely examined. On the 1914 base the retail; price index number for January, 1933, was 1268; and on the-same base the latest available figure (for August, 1935) is shown as 1331. This is an increase; but comparison of the component groups in the retail price table shows that a greater price has been exacted from the consuming public. A comparison of these groups (p reexchange figures being given first) is as follows:—Groceries, 1260, 1420; dairy produce, 889, 1035: meat, 913, 1111; three food groups. 1006, 1178; fuel and light, 163 L 1494; rent, 1525, 1450: 'clothing drapery, and footwear, 1143, 1208: miscellaneous, 1589, 1634. This shows that substantial fuel, light, and rent reductions, attributable to industrial economies (including wage cuts) and to compulsory interest and rent reductions, have been cancelled by the greater increases in price of commodities affected by high exchange. This is what has actually -happened: When high exchange was introduced retail prices (which always lag behind wholesale) were falling and the public were receiving the benefit; but high exchange intercepted that benefit and, instead of wage-earners having lower prices to compensate them for wage cuts, they were first of all deprived of this and subsequently of the further benefit that should have accrued from interest, rent, and wage cuts. Had [here been no high exchange the cost of living would have been much lower than in January, 1933. The public have lost both by the amount of actual increase and by the diversion of the benefit that would otherwise have come to them. An actual illustration may make this clearer. The Wellington' City Council has had its interest liability reduced | (by slalule) by 20 per cent.; but the saving lias not been passed on lo ; ratepayers. One reason is that (quoting the figures given by-Mr. P. ', M. Butler, who is a city councillor) ' [he council has had to pay £270,000 ' in five years for exchange. The Irulh ! is lliat someone must ]);ty, and some- , one lias paid. Speaking on Saturday < of currency manipulation, the Prime ' Minister said: ( We all know from hard experience ' I that we cannot get something for c

nothing, and whatever fanciful scheme for currency manipulation is proposed it has to be remembered that tho bill for it will come to somebody in the end.

We guile agree; and it is a pity the Prime Minister did not remember this before consenting to exchange manipulation.