A FA_SE ANALOGY

Evening Post, Volume CXX, Issue 115, 11 November 1935, Page 8

A FA_SE ANALOGY

In a plea for the retention of high exchange, Mr. H. D. Acland, president of the New Zealand Slieep Owners' and Farmers' Federation lias made use of a completely false analogy. England's reversion to gold, he states, is exactly the same as reversion to sterling in New Zealand, and he asks: "Is the New Zealand elector, in view of the experience of England, going to make the same mess of il by going off high exchange that the English Government got into by going on to gold in 1.925? ' i Ik- comparison ignore?

essential differences. When England returned to gold she had to bear the weight of enormously increased charges for interest, capital costs and wages incurred in a depreciated currency. She could not immediately scale down these charges, and, finally, she was forced off gold by (lie mismanagement of gold by France and' America, a badly unbalanced Budget at home, and panic on the Continent. New Zealand, if she returned to sterling after iwo years would not be saddled with wages and interest charges based upon a depreciated pound. Interest is actually much lower now than it was when New Zealand was on sterling— except whei'e it has to bear the exchange impost. The general level of wages is not as high as before the depression. In none of the other conditions which forced* England off gold is there any resemblance to the conditions operating when New Zealand, by sectionally-manipulated political pressure, was forced off sterling. The attempt to discover an analogyreveals the weakness of the high exchange case.