(To the Editor.)

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

(To the Editor.)

Sir,—ln "The Post" of October 23 your correspondent "K.G." invites" comment on his views on the exchange question. He says that the amount paid to the primary producer, as a result, of the exchange is approximately £12,000,000 annually, and every penny of this is paid by the consuming pub lie of New Zealand. I would like to add to this statement by saying that the whole of the money paid to the primary producers comes from the consuming public of New Zealand either by taxation or through the purchase of imports, and further, that it is on these payments to the primary producers, which circulate back to the consuming public, that the prosperity of the Dominion depends. Does "K.G." concern himself as to where the money of the consuming public comes from? I submit that without producers the consuming public would be without money! In New Zealand the country makes the towns, not tr.e towns make the country! In England the reverse is the rule because of the difference in the main industries It ;s the circulation of money thrcugh our primary producers that allows 80 per ceni. of the commercial fraternity to exist; the other 20 per cent, are maintained by industries other than primary! In New Zealand the slump of 1922 followed .the fall of wool prices— the depression of the last five years is the result of the collapse of all export (prices. These slumps following fall-, ing markets are not purely coincidences, for we have foolishly made overseas market prices determine the amount of credit in circulation in New Zealand. It is through the study of this side of the question that one appreciates the statesmanship of the Minister of Finance in pegging the exchange rate and other legislation. In spiie of low market values., he has definitely maintained the circulation of creait through the farmers to the 80 per cent, commercial fraternity and, at the same time, given protection to the local industries maintaining the balance! One would think from "K.G.'s" remarks on the taxable capacity of the high exchange that after the exchange bonus has been paid to the farmers and they had paid income tax the bonus went out of existence. Is this true in fact? Supposing the farmers spent the bonus, would not it be subject to sales tax —and income tax again from those that received it—and unemployment taxation when it was paid as salaries and wages to the consuming public?—l am, etc.,

G. H. WILKIN.