The Evening Star. TUESDAY, MAY 31, 1932. FARMING TO-DAY.

Evening Star, Issue 21116, 31 May 1932, Page 8

The Evening Star. TUESDAY, MAY 31, 1932. FARMING TO-DAY.

Tub addresses given by Messrs Sheat and Poison at last night’s meeting of the Otago branch of the banners’ Union reflect the very serious news being cabled at present on the precarious condition of Europe. In many countries very capable and even conservative financiers, to whom the idea of panic-mougering is repugnant, have latterly been saying in effect: “The whole world is bankrupt. Why not admit it, go through the formal process, and make a fresh start? ” A fresh start would involve the channels of trade being cleaned out, for they have become so fouled that trade cannot pass along them. This is true more of international than of domestic or internal trade, though it applies to both. The cleaning out of those channels is as much a political as an economic task. Particularly since the war economic frontiers have tended to become coincident with political boundaries between countries, and that is a bad thing. The politicians, prompted no doubt by business interests, see to prohibitive tariffs, embargoes, and quotas. In some countries, not least our own, they are intruding into the question of currency exchange, which used to be quite outside their metier. And latterly rates of exchange have become as serious blockages in the channels of trade as Customs tariffs. Mr Sheat made no suave attempt to soften down the hard outlines of the present position of the primary producer in New Zealand—a position which always dictates the prosperity or otherwise of the whole community. Our oversea markets have collapsed to or below non-paying point because idled consumers have little purchasing power. In consequence there is country in Otago going out of occupation although it may be in better condition now than at any time during its forty or fifty years’ occupation. The reason is that wool is at lower levels. than at any time in our history, and, with the exception of the coastal fringe and relatively constricted river valleys, Otago largely consists of an elevated sheep run. Much of such land has become a liability, despite postponements of Crown rentals and concessions and nursing from farmers’ financiers. Not much is heard to-day of the advice freely given when the downward trend of prices was first realised —i.e., to increase production. Increased production necessitates more working capital, and the farmer cannot get it; or more labour, and the farmer cannot pay for it. And increased production when the margin of profit lias disappeared moans present loss, which may increase as prices fall further because of over-pro-duction. The other advice tendered to the man on the land was to reduce costs of pro-

I duction. Mr Shcat declares that interI cst charges constitute quite .‘33 per cent. lof fanning costs. Here the fanner was i powerless, and ultimately the Government has intervened. Its mortgage interest reduction may seem clumsy and occasionally inequitable now it is in operation. But it is well intentioned, and, failing voluntary concession by many mortgagees, it was necessary. But Mr Sheat has pointed out that it is inconsistent for tho Government to exercise compulsion on others and (except for its clemency to Crown tenants) to exempt itself. Mr Sheat points to Australia as an example. It has had a big internal loan conversion, by which it pays a lower interest bill to its local bondholders, besides setting a lower general standard of interest throughout the Commonwealth. And Mr Stevens, of New South Wales, has suggested a joint move by the Australian Governments to induce oversea investors to convert their holdings similarly so that the-overseas interest burden also may bo reduced —a really more important matter, quite apart from the respective volumes of money and the heavy added charge of exchange, since it involves the money definitely leaving tho country. Mr Sheat evidently has no hope of Mr Downie Stewart sinking his pride sufficiently to entertain such an idea with respect to London. But to some small degree, with respect to New Zealand’s internal loans, Mr Stewart sank his personal ideas, and it may yet be possible that in the other matter it may be a case of “ vowing he would ne’er consent, consented.” As Mr Sheat hints, needs must when the devil drives.

When prices for our products were payable, and times were more normal, the New Zealand exchange was about par—i.e., the New Zealand pound was equal to the English pound, unless we had indulged for a time in over-importa-tion. But now, though we have cut visible imports to a minimum and show a favourable trade balance, our pound is at a discount. The reason is our invisible imports. Wo are paying out for the privilege of having borrowed in the past, It would surely be a great help if these payments for nothing tangible in the present could be eased. It would surely he a greater help than the step which both Messrs Slieat and Poison advocate—a treble depreciation of the New Zealand pound. This is directly in the teeth of a proposal which is to be made at Ottawa, where there is sure to be strong advocacy' for the establishment of an Imperial currency and the abolition of big fluctuations and discrepancies as between different parts of the Empire. The present rate of exchange limits New Zealand's import trade; to treble the rate would cripple it and would greatly add to unemployment and to farmers’ costs as well. Mr Poison made an ad captandum argument to the farmers’ meeting last night on this question of exchange. But only a few minutes previously he had contradicted himself in advance. He had been ridiculing Mr Holland on his plan to save the country by eliminating imports and increasing exports. “ That,” said Mr Poison, “ was a fallacy which everyone would see through. If they cut out accepting imports they would very soon find that they had no exports. The United States of America comprised a perfect example in point. That country had surrounded itself with tariff barriers until imports were completely excluded, with the natural result that exports shrunk similarly. If New Zealand attempted a similar blunder they would find themsclcvs falling into precisely the same trap into which America had stumbled. Tlio world was unable-to trade with America, and any country that attempted like expedients would be similarly affected.” But Mr Poison’s rate of exchange scheme would exclude imports ns surely as the highest Customs tariff. Our farmers are suffering chiefly because the world’s trade channels are blocked. Th-v will ( not regain prosperity by sealing up every channel in which there yet flows a trickle. At present every country seems to want to sell and not to buy. That is impossible.