LOWER STIRLING

Gisborne Times, 13 October 1932, Page 3

LOWER STIRLING

BRITISH SPHINX

WHAT NEW ZEALAND CAN DO

AND WHAT SHE CAN’T

“I say that more than hull’ tile; farmers in NW Zealand to-day are: failing to meet their engagements in full, and a largo proportion of the. remainder can see the same fate in store for them if the price level does not rise substantially,” said Sir Wil-. Hum D. Hunt at the annual meeting! of the Canterbury Employers’ Asso-\ ciation.

He said that the sickness of the farmers had made the cities sick, and that the cities could not got well till the farmers got well. New Zealand depended on restoring the farmers’ • purchasing power, and" that, in turn depended on raising the price level.

ONE STRING TOLLABLE HERE

A movement in anyone of the following three monetary factors would raise the New Zealand price level: —-

(.1) The gold price level; {2) The relative value of sterling to gold. (It) The relaliie value of the New Zealand £ ■ to sterling. But No. 1 and 2 are beyond our control in New Zealand. No. 3 is not. No. 3 is within the scope oi internal adjustment. “The problems of every country are probably more than 75 per cent, internal and less linn Jr, per cent, external. The question is, is it worth while trying to deal with our 75 per cent, into 1 al tioubi«-s' by following Sir Judah Stamp’s suggestion of i-ecogu Aiug that liie. ; iirehasing power of money has varied and making- the appropriate adjustments. Every country in the world except four has already been compelled to adjust its internal currency to meet the storm. France, which only six years ago completed one of the widest internal adjustments of all, is to-day undoubtedly in the strongest financial position of any country. Is it not worth while exploring the possibility of Sir.Josiali Stamp’s appropriate adjustments? If wc can make appropriate internal adjustments. live will have dealt with 7-5 per cent, of our troubles, and can afford co wait on world developments to cure the remaining 2d per cent.” Sir William Hunt maintained that "the farmers' price limit must be raised,” and that New Zealand retained a “sav in the relative value of the New Zealand JL‘ to sterling. .. . Stability of exchange is undoubtedly very much to be desired, but reasonable stability in the price level is much more to be desired. THE OVERSEAS STRINGS. As regards • monetary factors, No: 1 and No. 2 these are beyond New Zeakind’s control, but Sir William's own view is that Britain ■ herself may elect to lower the price of.sterling, and thus (through fall in sterling) the New Zealand farmers' price level-would be raised by that external action. Secrecy properly covered the handling of Britain's exchange stabilisation fund of 107 million sterling, but it was possible that even this would not prevent a fall in sterling. Circumstances, might be too strong for the British Government. “My own view is that a rise in the price level is becoming . so very necessary for Britain that unless we have an early world rise in gold prices, which would, of course, carry sterling with it, an attempt will be made to lower gradually the value of sterling, and thus increase the sterling price level independently of gold. As New Zealand is tied to sterling, any movement in the sterling price level immediately affects us in New Zealand.” Since sterling • left gold a very little over a year ago, the dollar rate lias fluctuated beweeu and 8.25* (par rate 4.86 3-5). “ r J o-day it is 3.d6, which means that to-day sterling is now 29 per cent, oil’ gold, or to put it the other way round, sterling would have to increase in value to gold. Even with sterling at this great discount compared with gold, as the index liguros I have given you show, the sterling price level in Britain is lower to-day than at any time during the last century excepting only in the ■ nineties. There is a very large body of opinion in Britain to-day to nay that sterling should be further reduced in value as compared with gold.”