EXCHANGE RATE RISE

Hawera Star, Volume LII, 31 January 1933, Page 6

EXCHANGE RATE RISE

SUPPORT TO N.Z. PLAN VIEWS OF TARANAKI FARMERS CRITICISM DEPLORED. MR. W. J. PO'LSON’S ATTITUDE. A meeting at Stratford last evening of approximately 200 "North and Central Taranaki farmers “deplored the concerted attack on the Government s policy to give relief to the primary industries by means ol an increase in zhe exchange rate, and readjustment of tariffs, and a general reduction of interest rates, believing such a plan to offer not only a relief to the farming commnnitv but also substantial assistance to the country as a whole.” The meeting also urged the Govern - nent to proceed with the de-rating of farm lands and the 1 substitution of petrol taxation and to exercise tne closest economy in Government expenditure hand in hand with its general programme. Mr. H. E. Blyde, president of the North Taranaki provincial executive of the Farmers’ Union, presided, and Mr. W. J. Poison, M.P., addressed the meeting, explaining the case for high exchange, replying to anti-exchange propaganda and setting forth the proposals for a readjustment of tariffs, interest reductions and derating of .farm lands. The chairman said the meeting .was called to try to offset a determined effort to stampede the public into thinking the increase in exchange would be detrimental not only to the public but also to the farmer If the Government had not tackled the question, then people would have had cause to say that the Government was failing in its duty. It was vital that something should be done, and it was np to the farmers to shefw that they appreciated that the Government had done something for the country.

SOMETHING DRASTIC NEEDED. Something drastic, said Mr. Poison, was purely necessary in order “to get the farmers out of this mess.” The speaker reviewed the economic position of the dairy industry and said that farmers must improve internal conditions. The programme for doing so had been discussed at a meeting of representatives of all primary producers, and certain essential measures were agreed on as necessary. The Government’s programme of increased exchange, readjustment of tariffs and interest reduction were included in tllfese measui’es. Mr. Poison said the second plank of tariff adjustment would compensate for any increase in costs that exchange might cause. The exchange increase would mean an increase, of internal wealth of £4,000,000 or £5,003,CGO Statistics over the past year showed that when the export income was a certain figure the national income was three times as much, so the £4 000,000 or £5,000.000 would actually mean £12.000,00 or £15,000,000. That had been Australia’s experience despite the fact that the Australian tariffs were 30 per cent, higher. Moreover the cost of living in Australia was substantially lower than it was m Aew Zealand. These factors were shown to the audience by means of an official cn-aph on which was traced the exchange rate and cost of living as experienced in Australia. People were being told that the country would be taxed to death in order to pay London, continued Mr. Poison. tie reviewed the Budgetary position and the amount of interest charges due m but explainer, that "the raising of exchange would not cost the country any more in paying the overseas' interest charges—a bale of wool or a pound of butter would be just exchanged for as much or as little as it was .before. He admitted, however, that there would be - lag of about a rear before the readjustment reached the Treasury through the taxpayer. Just about one-fifth of the national income was collected in taxation to-dav, and if it continued at the same rate on the inflated income the extra amount would be enough to pay the exchange and leave something over. That was the economists’ view also. It was problematical if the extra £i ,000,000 for which the Government proposed to make provision for loss because of the higher exchange would ho needed. . “Now I want to refer to the inconsistency of anti-exchange propagandists,” ’said Mr. Poison. “When the farmers wanted a free exchange a while ago thev insisted that it should be pegged. Now that the farmer have it pegged thev demand that it should be When the Government refused to interfere with the banks, it was blamed for letting them run the country. Now that it has interfered, it is attacked for not letting the hanks continue to do that. None of these propagandists has offered any alternative unless it is the policy of Mr. Downic Stewart to do nothing. Has the public realised what that would mean ? Are the propagandists prepared to cut all wa«'es and salaries another 25 per cent., stop practically all expenditure, reduce public services to a skeleton and let the primary industry go to the wall? How will the importers get on then?”

anti-propaganda. Mr. Poison quoted Australia as an example of how an inflated exchange could be beneficial. Australia, he said, was cutting taxation by £8,000,000 this year, the cost of living was lowered and bonuses of £4,000,000 were being paid to producers. Were the critics prepared to cut wages and salaries by -50 per cent, and reduce the public service to a skeleton ?

Boots were imported to the value of £1.110,000 and boots were manufactured to about the same value in New Zealand. To enable the local manufacturers to operate there, were tariffs amounting to £450,000 or £500,000.- If tlie tariffs on. boots were wiped out the amount saved would more than pay the wages of employees in the 3000 factories connected with the boot trade. It was said that the exchange inflation was a breach of the Ottawa contract, but if there wa a breach then it would he repaired by the adjustment of tariffs. The third plank of the Government was substantial interest reductions. “If it cannot he done voluntarily, ’ ’ the Government said, ‘ ‘it will he done hy compulsion." Mr Poison asked if these three planks in themselves were not sufficient for all reasonable people to keep the Government in office. Both motions previously quoted wore carried. Questioned, Mr. Poison explained how the rise in exchange would not contravene the spirit of the Ottawa agreement. At Ottawa the agreement with Great Britain included a clause

entitling New Zealand to make alterations in its internal currency system, rte made no secret of the fact that the extra benefit the farmer would derive from tiie high exchange rate would be found by the remainder of the people of New Zealand, but the latter, he contended, would gain turn the increased velocity in the circulation of money.

SUPPORT BY S4R JAMES PARR

LESSON IN AUSTRALIA

OAMARU, Jan. 30

During a speech at the luncheon following the opening of the new M aitangi bridge over the A\aita-ki River to-day, Sir James Parr supported the action of the Government in pegging the rate of exchange, submitting that the vital thing was that export prices must be kept at a payable level. The high rate of exchange had saved Australia. The immediate peril of New Zealand was the impending insolvency of the farmers. If production fell they would all go- under.

RELIEF IN DEPRESSION

HUTT FARMERS’ OPINION

The belief that the raising of the exealinge rate would do move to relieve the effects of the depression than anything else was expressed by the Hutt Valley branch of the Farmers’ Union, held in Upper Hutt on Monday evening (reports the “Dominion”). The meeting unanimously passed a resolution heartily congratulating the Government on raising the exchange and expressing confidence that that action would ,do more to relieve the effects of the depression both in town and country than any other measure that could have been adopted.

NO OTTAWA BREACH. POSITION KNOWN AT HOME. CH RISTCHURO FT, Jan. 30. Two points of the exchange question were touched on by Sir James Parr, who is visiting Christchurch, and declared himself as pro-exchange. In his opinion there seemed to he little foundation for the complaint that Now Zealand had sold Britain over the Ottawa Agreement, and the view some people took that England was disappointed over the increase in the exchange rate did not impress him. Sir James, a former 'High Commissioner. said that Britain knew perfectly well that New Zealand’s primary industries. on which she depended, were so hopelessly depressed that it did not pay the farmers to produce. Unless, therefore, production for export was stimulated and increased the country would go under. Questioned regarding the Ottawa Agreement, and the effect of high exchange, Sir James asked what actually was the position and proceeded to explain. “Britain at Ottawa gave Australia the same tariff nriviJoges as New Zealand. “No more, no less,” lie said. “Yet Australia had an exchange of 25 nor cent against Britain while New Zealand at that time had only 10 per cent. Again, Australia’s tariff wall, talcing 21 important lines of goods, was 400 per cent higher than that of