THE EXCHANGE QUESTION.

Manawatu Standard, Volume LII, Issue 72, 24 February 1932, Page 8

THE EXCHANGE QUESTION.

(To the Editor.) Sir,—Your report of a statement by the head of a Rulmerston North trading firm regarding . the exchange question makes quite interesting reading to all farmers. His criticism of the views of the Chamber of Commerce I do not wish to allude to further than to ask our commercial friend is he altogether innocent of inconsistency himself. First he wants to take from the farmer the opportunity, to receive what he admits would come to him if the exchange is allowed to take its course in the ordinary way without Government interference; then he gives as his reasons that it will press hardly on the importer as he might get caught if exchange suddenly ‘ fell when he had stuff on hand, bought on the high rate of exchange; yet he goes on to berate the poor farmer who bought land at too high a price in boom times. Then the wage earner whose £1 is reduced to 13s 6d;. if this wage earnest lives entirely on imported goods he deserves that his wages should be reduoed more, even, than that. It is absolutely astonisliing to me that such an amount of imported stuff is purchased when the Dominion can~and does produce it—and mostly as good or better than the imported. If New Zealand people insist on buying New Zealand products a lot of our difficulties would be overcome. I. agree with our trading friend that great care is essential in dealing with interest. Very great hardship is possible to those whose living depends on the interest of savings of a lifetime of hard work and thrift, hut it is indisputable that in many cases interest rates are far too high and should be reduced, if not voluntarily, then by legislation. Apparently our friend advocates handing the regulation or the exchange to the banks; that is alright provided they have not a monopoly , protected by the Government and the farmer is not forced to hand over his proceeds to be manipulated to his disadvantage. The figures quoted in the interview as to income tax paid by. farmers as compared with the rest of the community put the whole thing in a nutshell. Income tax is the fairest of all forms of taxation and these figures show who is doing the “smokin' ” and who just does the “spittin’ ”. . Your trader will surely not admit that the silly farmers are more adept at dodging income tax than the commercial community. as the farmer pays, according to his income, a sum of £96,684; the rest of the community pays £3,852,875. I can agree with your trader in a lot of the latter part of his statement regarding the automatic adjustment of values. A lot of this is in process at the present time, but the part that amuses me in this connection is- that all the commercial community discuss this process of adjustment as if the farmers were the only class that paid too much for anything. Yet some of the most prominent commercial men entered into propositions and made purchases that would put our more optimistic farmer—land speculator—to shame. I think not only will some water have to be taken out of farmers’ capital, but if some of the water is let off the capital in concerns doing business with farmers a considerable load will be lifted from his back and he will recover much more quickly; and with him the whole community. In short, apparently your importing trader wants to deprive the farmer of his advantage in exchange, so that his income tax shall not be increased. Farmers, taken collectively, will, if humanly, possible, honour their obligations, and commercial interests, having now Seen the error of their ways, should endeavour to find a way to cut down costs, thereby helping toward recovery on sound rock bottom business lines to mutual advantage.—l am, etc., WALTER S. CARTER. (To the Editor.) Sir,—Statements concerning political or economic questions made by interested parties almost invariably develop into special pleading of a specious nature. The view, expressed by an im-porter-trader, published in your Tuesday’s issue comes within that category. Although there is a certain amount of truth in some of his statements, the utterance, as a whole, leads to faulty conclusions. Ho adopts the argument of a prominent industrialist, writing in a Wellington paper, and thus makes it liis own. This industrialist states: “If a farmer is paying interest on a farm nominally worth £IO,OOO, but of which the true value now is more like £SOOO. ...” Evidently this, industrialist does not understand values. He apparently imagines that money has a fixed or invariable value and that everything else must give way to it. He does not, apparently, understand that it is not the land value which fluctuates po wildly, but that it is deliberate interferences with the money measure which cause valuations to fluctuate. It is inflations and deflations of bank credit which cause these gross injustices against the farmer, the manufacturer, the distributor and the worker in favour of financial interests. These inflations and deflations of bank credit are the prime cause of trade cycles; and these trade cycles at each turn make the rich richer and the poor poorer. Again this industrialist says: “It iB a matter for voluntary or forced adjustment among the parties concerned who presumably entered into their contracts with their eyes open as to future possibilities.” Quite so. But is it a reasonable thing or an unreasonable thing to expect a farmer to foresee a deliberate alteration of from 40 to 60 per cent, in the purchasing power of sterling? Must he take this economic confiscation of his equity without fighting against the gross injustice of it? This industrialist further says: “The writingdown process would involve some failures.’.’ Some failures? Why, it involves the economic confiscation of the equities of all farms, homes and businesses mortgaged up to, let us say, 60 per cent, of the values obtaining just prior to 1922. One need not carry the criticism further, for it is very obvious that our trader-importer is one of those who can only think in terms of making man and his industry conform to the banks and money, instead of making banks and money conform to the welfare of man and to the continuance of his industry. Money is meant to serve man, not man to serve money. Owing to thoroughly unsound monetary methods and practices, we are suffering from a severe money shortage, and it is high time we started to put banks where they belong—and that is, as servants, not as masters of man and his industry. We must devalue money—that is the same thing as saying we must increase the circulation of money forthwith and without any further tinkering with side issues—otherwise our country heads straight for the rocks of ruination.—l am. etc., ’ ■>; P. B. FITZHERBERT. February 24th, 1932.