EXCHANGE PROBLEM

Manawatu Standard, Volume LII, Issue 69, 20 February 1932, Page 2

EXCHANGE PROBLEM

(Contributed by the New Zealand Welfare League.) Several correspondents have asked the Welfare League to express some opinion on tire Exchange controversy. This difficult question has been _so much discussed that the public and disputants are apt to be confused and to lose sight of the principle involved. We have always taken up the stand that the less interference there is with the natural law of supply ana demand the better. In times of crisis like those we are (passing through all sorts of artificial methods are proposed to endeavour to get round the working of this law. We believe. speaking generally, that while such artificial interference may ease the difficulty for the moment, it makes the return to normal more difficult. It must be admitted, however, that there are occasions of national crisis, when these natural laws may be to some extent controlled by regulation, but before this is attempted care must be taken to see that the crisis really calls for it, and even then the form of regulation requires most careful enquiry, as to how it will affect the National welfare now ■ and in the future. Great care should be taken that every section of the community, likely to be affected, is consulted so that the national effect of "he step be properly foreseen, before the natural economic laws are interfered with. . . There is on e important point in connection with this question which we have not seen mentioned, namely, its effect on.lmperial matters. If, for instance, exchange is “pegged”, at an artificial rate, which happens to be above the figure which would optain on a free market, how would it affect Great Britain? and what would she say? She has granted us 10 per cent, preference on our produce, at any rate until the next Imperial _ Conference, this is most valuable assistance. Can we expect to retain this concession from her if we artificially “peg” exchange above its natural figure? Will England not be entitled to point out that we have fixed exchange rates at an abnormal figure and thus hampered her exports to the Dominion, therefore she cannot continue to grant preference to our goods P This point must be kept in mind especially in the interests of our primary producers.