Greymouth Evening Star. MONDAY, AUGUST 30, 1948. Exchange Cut And Prices

Greymouth Evening Star, 30 August 1948, Page 4

Greymouth Evening Star. MONDAY, AUGUST 30, 1948. Exchange Cut And Prices

MOW that some of the political smoke that arose from Mr Nash s exc iange cut bombshell has cleared aua). i ls P sible to get a clearer picture ol the e ec s of the restoration of New /ealam s cinrenev to parity with sterling. So far as the great mass of the buying public is concerned, it is obvious that the reduction of prices, principally applying’ to imported o-oods, will not be as extensive as no doubt was at first expected. Indeed. iere !S clearly a danger that it "'dl be but fleeting. The relief, small though it may prove Io bo, will nevertheless be a welcome change in the meantime from the ever-climbing spiral of costs. But the limiting factor is that though the exchange cut may, bring about a. small increase in the people s pin - > chasing - power there will be no commensurate increase in the volume ol goods available for purchase. This point was admitted by the yiinisler of Supply. Mr Nordmeyer, in the House ol Reprosonlatives, when he confessed that the gap between purchasing power and the volume of o-oods was still too wide. The vilal question for wage-earners, of course, is: How long will Ihe benefits, if any, last ! So lar as internal costs are involved, adequate production is slid the chief specific against inflation, and, of course, on its own admission, implied and otherwise, the Government has done nothing at all to encourage the achievement of this objective. What really concerns Ihe great mass ol the wage and salary earners is the value of the pound note. It is plain eeonomie sense that what ultimate good can accrue to this section of the people from the exchange cut, viewed as a step towards “disinflation,” largely depends on Ihe com-batting-of oilier inflationary influences. II is one thing to provide a palliative pit is another to apply a remedy with the aim ol scouring a cure. To claim, as the Government has done, that everyone will benefit from the exchange cut is, of course, pure ‘political clap-trap. Some sections of the community will suffer, and suffer severely . For instance, lhe farmers’ gain from cheaper imports —the indications are that the overall price reduction will bo much smaller than 20 per (-ent. —will he trifling compared ?vith a 20 per cent, (-ut in the total income from primary produce exports. The Government. appeals for more production, but impairs the i’armors’ ability to produce more. And, of emirs(‘. the farmers are not the only section of the community to be affected. 11 is. in fact, impossibly to gauge with any accuracy, the full ultimate outcome ol’ the Government’s move. It is possible that it may have an offei-l on employment. a prospect in regard io which union leaders in Wellington have already expressed some tear. The Government has not made the, country either richer or poorer by liringing New Zealand currency back to parity with sterling. What- it has done is so to manipulate the economic basis of the country as to balance one person’s gain by another’s loss. Il has merely done what any political pickpocket can do. Hut it has taken no positive act ion calculated to pi-e--vent that money from continuing to lose its value. Instead, it has talked its usual line ol’ political chip-trap. Mr Nash himself providi-d a classic example ol the methods employed by Government leaders to foster (-lass prejudice. He may have lelt himself justified in using Sunday evening Io broadcast a political boast, but surely he could not justify his failure to 1(>)l the whole truth. Giving a reason for the secrecy surrounding the exchange decision he insinuated that tin.-im-ier ’‘sharks” were prepared to make thousands of pounds by sending money to this country, had 1 hey known that Hit- rati- of exchange would be altered. But that danger did not exist, and no one knows that better than Mr Nash. The Reserve Bank has control of such m'fniey transfers, and Mr Nash controls the Reserve Bank. When Government leaders talk in this lashion, as thex consistently do. it is no wonder that they arouse widespread suspicion as to their real motives.