CORRESPONDENCE

Evening Post, Volume CXX, Issue 112, 7 November 1935, Page 8

CORRESPONDENCE

WHO BENEFITS ?

(To the Editor)

Sir,—ln Monday's "Post" "Fair Deal" in .reply, to my letter of October 29 attempts to refute my statement: that the public of New Zealand, and none other, pays for the cost of high exchange. Much of his letter is devoted to a discourse on our trade with Australia and world currency devaluations; subjects which have rid-bear* ing on my statement whatsoever. "Fair Deal" elects to ignore the main clause of my statement re market prices '. "All goods imported into New Zealand are bought in overseas markets at the normal rates ruling in 'these markets." This is the crux of the whole position and negatives all "Fair Deal's" discussion of currency devaluations and' falling prices. My point is that New Zealand has 'no place in fixing these prices—they are the outcome of world conditions and to suggest that they are reduced especially for our benefit is farcical "Fair Deal" states: "The fact that British goods are coming into New Zealand in the same quantity as before the exchange rate was increased proves that the British manufacturer did reduce his price in order to compete with New Zealand and Australian manufacturers." This is the whole basis of his argument and, as pointed out in my first letter, his "proofs" are sadly- incapable of bearing the light of scruiiny. Briefly the position is this: World prices for all goods—primary and manufactured—have fallen. The British manufacturer was not forced to reduce his price- to New Zealand so as to retain this market; his costs had fallen by roughly 30 per cent, so that the fall in prices was simply a natural result.. New Zealand simply received the benefit of this world drop in prices —but exchange has transferred the whole benefit to the farmer. Had our exchange been at par New Zealand would have still bought her goods at the same price in sterling as she buys today, and the consumer would have been able to buy these goods locally at least 25 per cent, cheaper than'is now the case. "Fair Deal" admits that there were, and are, primary producers who did not need the exchange benefit. I admit that there'were a great number1 who! did and I agree that these should be helped.. My arguments, however, are directed against the means by which this help has been given. By the inequitable operation of "exchange'," the higher the prices received for primary produce the greater the "bonus"; the bigger the farmer the greater the help he receives. In most cases the big farmer is the one with a very small, if any, mortgage on his land. His income even with low prices ruling was more than sufficient for his needs. The small farmer with a large mortgage on his land receives so little help that' he personally is no better off. In most cases his mortgagee takes all of his "bonus" income —and in not a few cases the big farmer is the mortgagee of the small one. "Fair Deal" states that "No one has shown an acceptable and workable alternative.'' Many alternatives have been put forward in the House and rejected by the Government without consideration. .. An extension of the Rural Mortgagors' legislation would have met the position—with provision for certain compensation to mortgagees by the State. This plan could have kept every farmer on his land, kept our;exports at today's sterling ■ figure, and this at a cost to New Zealand of nearer four millions than fourteen. "Fair Deal's" pessimistic picture of New; Zealand "during the slump" is highly exaggerated and is best answered by the public statement of the banks-showing that less than 10 per cent, of the farmer customers were in. serious difficulties.—l am,-. etc..