MR STEWART ON THE EXCHANGE RATE.

Evening Star, Issue 21820, 8 September 1934, Page 12

MR STEWART ON THE EXCHANGE RATE.

Me Uow.vie Stewart refuses to recant. He is content to be regarded as unregenerate by his former colleagues, Messrs Forbes and Coates, because he is convinced lie was, and is, right. There is scarcely any need to mention the particular issue referred to. It is that over which he resigned—the arbitrary raising of the rate of exchange. And why should Mr Stewart recant? He is in a stronger position now than twenty months ago, simply because he can point to the results of defiance of economic (and moral) law; and those results, on balance, have been harmful instead of beneficial. It is all very well for members like Mr Nash, of Palmerston North, to claim that farmers and stock and station agents have benefited by our self-imposed currency depreciation, and leave the matter at that as though there were no other side to the question. From time tQ

time we have observed wilii sorrow that at meetings of farming organisations there have been complacent calculations of the monetary benefit derived in their particular case. There is no reference made at such gatherings as to whence it lias been derived and at whose expense. It is a subsidy contributed by the rest of the community, and to gloat over the pro ceeds of such a tpicstionablo transaction is bad manners. It is also bad arithmetic. Almost in the same breath as Mr Nash lauded the results of the high exchange lie urged our Government to seek fresh markets, because of the quotas imposed on our products by Britain. Why were those quotas imposed? One reason was supplied by Mr Downie Stewart, who said yesterday;—

I might quote many .British papers that deplored the Go\ eminent’s high exchange policy and made bitter complaints as to its damage to British traders at the very time when it is of vital importance to us to promote goodwill for the sake ot our own markets that are now in jeopardy. 1 might point out that while the Government focuses its attention on the bonus to farmers'it may well lie that the farmers have lost more than they have gained if we take count of the ill-will and irritation that have been caused. I might quote recent eminent British authorities to the effect that the exchange depreciation has acted contrary to all anticipation as a deflationary factor taking the world as a whole, and has heavily accentuated the fail in agricultural prices. They say that taking the long view the economic effect of maintaining a currency at a wrong level by Government action can only be disadvantageous to everybody concerned.

Even thus late in the clay farmers and their more or less accredited mouthpieces might do worse than ask themselves whether the gains on the swings balance the losses on the roundabouts. On the best authority they are informed that the currency manipulation on which they insisted has depressed the world markets on which they depend for a livelihood. Their net gain, if any, has been transient. In the past our staple export trade was built up on good quality and square dealing. At a time of crisis, when the goodwill thus created might have stood us in good stead, we lapsed in both respects. Me now have to pay the penalty. Me have to seek new markets because we have antagonised our principal customer. And new markets are desperately hard to find in an impoverished world.