King Country Chronicle. Tuesday, November 22, 1932. RAISING RATE OF EXCHANGE.

King Country Chronicle, Volume XXVI, Issue 3448, 22 November 1932, Page 4

King Country Chronicle. Tuesday, November 22, 1932. RAISING RATE OF EXCHANGE.

The agitation that has started in the House of Representatives to raise the rate of exchange will most likely bring about a split in the Coalition Government. While it is quite realised that the position of the primary producer in this country is precarious, and that he is justly entitled to some relief, it seems to be a dangerous experience to grant that relief by such artificial means. There are some advantages to be gained by raising the rate of exchange. With the existing rate at 10 per cent., the primary producer will obtain a further 15 percent. for his exports; local manufacturers will gain an advantage by what is equivalent to a further 15

per cent, protection. It lias to be remembered, however, that while the farmer will receive increased prices for his produce, his costs must necessarily go up, to what amount it is impossible to state. The farming community has persistently advocated the lowering of the tariffs, and there is practically 'no difference between tariff duties and the raising of the rate of exchange beyond that the exporter obtains the benefits instead of the State. Another thing that can be asked is whether this extra amount the primary producer will receive is going to save him. Will not the extra amounts be used to pay his debts? With these possibilities the proposals to depreciate the currency of the Dominion should be seriously considered. There seems to be little doubt that if the proposal is carried into effect, there must be further taxation all round and a general increase in the cost of living. New Zealand has to remit about £7,000,000 every year for interest on loans domiciled in London, and to raise the rale of exchange a further 15 per cent., will mean an additional charge of £1,050,000 on the public lands of the Dominion. This will not only affect the State but many local bodies. It would seem that while there are some advantages in raising the rate of exchange, there are also many disadvantages. The agreements made at the Ottawa Conference cannot be ignored when dealing with the exchange question. This Dominion gained certain concessions at this conference, and by placing further restrictions on British imports these concessions may be seriously jeopardised in the future. Mr. Downie Stewart has been negotiating in London for the conversion of existing loans and redemption of maturing loans, and it would be well worth waiting for his return and hear the results of his negotiations before dealing with the exchange. Hurried action in this way might upset all the good that it is hoped may be realised from Mr. Stewart’s visit to London. Subsidies and bounties are not sound in most cases, but the proposal to raise a loa'n of £5,000,000 to subsidise our exports seems to be the best way of helping the primary producers. The times are abnormal and require abnormal methods so far as the man on the land is concerned. Such a subsidy would avoid the dislocation of public and private budgets, the disturbance of trade, an increase in the cost of living, and a breach of the agreements made at Ottawa, The time is certainly not opportune to go in for 'new loans, but the primary producers in the country must get some relief, otherwise there will be chaos, not alone for the farming section, but all other communities.