The Gisborne Times PUBLISHED DAILY. THURSDAY. JANUARY 28, 1932. THE VEXED PROBLEM OF EXCHANGE RATES.

Gisborne Times, Volume LXXIII, Issue 11549, 28 January 1932, Page 4

The Gisborne Times PUBLISHED DAILY. THURSDAY. JANUARY 28, 1932. THE VEXED PROBLEM OF EXCHANGE RATES.

-.lf..the-'gflWrJiThinif •decides' -46 hip guided by Sir. George. Elliot, ex-elinfr-it inn of. the Bank of Now Zealand, and by others, who hold similar views, it is certain that it will -not- agree •to tlio raising of the exchange rate very much higher than at present. On behalf of the producers, much had previously been said and written with the objoc-t of showing that it would be a distinct advantage—to the farming community at any rate—if llioir returns, per medium of a higher exchange rate, could be enhanced to the extent of 30 per cent, or at least to 2o per- cent. Sir George EllioQ however, is firmly of tlfo opinion that most. serious disadvantages would also accrue from such a step. The Evening Post has been delving ''into the matter and it has come to the conclusion that the disadvantages would far outweigh the advantages. It points out, for instance, that the prices in relation to the produce! which is consumed in this Dominion are linked upon the returns which producers receive overseas plus any exchange advantage. If, therefore, the vale of exchange should Ixi raised to the extent now claimed by the producers it would. mean a very appreciable increase in the cost of living in this Dominion at a time when’ wages have becit lowered and when a threat of still lower remuneration bangs over its workers. According to our Wellington contemporary, it is also beyond question that the Dominion could not stand the extra taxation that would be involved. It publishes a table which shows that of the income on which taxation is levied the farmers’ section is but a very small percentage. Of the total assessable value of £39,665,861 fot 1930-31, the Year Book shows that the aggregate income of tbo farmers for the jnU’po’sos of taxation was only £1,7.22,0i1. It is plain, therefore, that if tlio producers’; returns were artificially advanced by say another £4,000,000 the income udder tlio. heading of “I>rming” : would still, amount to. only a very, small proportion of tlio fetal of assessments. 'The Evening Rost does not agree that 'bpcauso Australia advanced its exchange rate so this Dominion would bo wisp to follow -suit- |a Australia tlio rale was not primarily advanced tp. assist the producers, nlthough ft had that effect.' The object of'increasing the rate on tlio other side of . tlio Tasman was mainly to discourage imports and, in this way, to (restore the balance of trade. Now on

the other hand, already.lms a of ‘exports' oVW-impoTts. "Itr ««*£ • confessed that the government hnds itself Confronted, very - perplexing Ihlcm. Not fort a single'moment da/e believe that it will a*ree to A#nno a party to harassing the general . public nibro seriously than ih avoidable.. On the other hand,-at is bound to take into consideration tins other very important fact; that, un i the farmers l«eome more prosperity will not r<?tur)i .V 1 ,.I*®' 1 *®' of th/tmvnspeople. If a ir l' create in the exchange rate \youkl mal/rall the ‘difference to the.producerpand unquestionably it would ,b« a • considerable help—the - goyernmcp ', ii ; would sooni,: will not averse- «> tlio alteration. There is, . little likelihood that it will agree to 9pegging” . til® rate as high as , per 'cent, nr 30 per cent. If imports remain .at the present low level and the aggregate value of exports tern s t<r crisp. ’the rate, left untrammelled, could hardly advance beyond the present. figure. The bulk of the public will share the Evening Post’s point that the circumstances of the people as, a whole? do not justify mcrensrs in the cost of living and addi- . taxation and every effort sliouh bi/mado to prevent any serious in* leases in those important directions.