EXCHANGE QUESTION

Manawatu Standard, Volume LII, Issue 72, 24 February 1932, Page 9

EXCHANGE QUESTION

REPLY TO CRITICS. ___ i (By Farmers’ Exchange Committee.) The controversy that has arisen oyer the exchange question is degenerating into a controversy of town against country and one sectional interest against another. This is to be deplored. In the final analysis there is o>n this question no difference in the interests of any one section of the community against another. All are equally interested in the restoration of the economic life of the community to normal health. The exchange question is only part of the larger question of the economic condition of the whole community. Under the present econOmio circumstances it is no use individuals or seor tional interests taking the short _ view of what will be good for them in the immediate future. They must take the long view of what must be done to re■tore the whole economic structure of the county' to normal" functioning and health, for unless this is _ done every man, woman and child in the. Dominion will suffer. No immediate f tains can make up-for the ultimate oss. An economic structure, like any, other structure, is built on foundations, and unless the foundations are secure the whole structure is unsafe. If the foundations go the structure goes too. In our modem civilisation every country is dependent on other countries to a greater or lesser extent. The measure of this dependence is a country’s per capita foreign trade. The foreign trade pf New Zealand is per head of its population greater than that of any other country. New Zealand’s dependence on other countries is probably, therefore, as great as, if r.ot greater than, that of any other country. Since every civilised country is dependent on other countries, it is obvious that the foundational industries of every country are its export industries, because without these it cannot deal with the outer world in any way. DEPENDENCE ON FARMS. New Zealand’s export industries are its farms. We export practically nothing but farm products. Without surplus farm products New Zealand could not deal with the outer world and our standard of life would go. Our dependence on farm products .s such that every town dweller is just as much interested in the maintenance and increase of farm production as the farmer himself. Farm products are the basis of our export and. import trade. The volume of both depends on the volume of surplus farm products. Farmers’ purchasing power is • the basis of all internal trade. Every town industry is either serving the farmer or serving those who serve the farmer. The prosperity of the towns depends on the farms. It is the present economic sickness of the farms that is causing the economic ills of the towns —cure the ills of the farms and the ills of the towns are thereby cured. Many of those who have taken part in the exchange controversy seem to base their arguments on the assumption that the volume of farm production will continue of the farm financial conditions. This is a wrong assumption. Farm maintenance is now being neglected through sheer inability to meet the cost, and as maintenance goes production will go too. Figures freely quoted in the Press show that the general level of the value of farm products has in the last two years fallen 40 per cent, below the average level of the 16 years 1914-1929. This only tells part of the story. The figures quoted are f.o.b. values. What interests the farmer is what he gets on his farm after costs from farm to f.o.b. are paid; and these costs have been reduced very little. Factory and transport costs on land and sea average about 40 per cent, above pre-war rates, while the farmer receives much less than prewar rates. The average sheep farmer is now- only receiving on his farm about 40 per cent, and the average dairy farmer about 55 per cent, of the amount he 1 received in the years 1914 to 1929, and he finds his costs inelastic and his roturns will not meet them. As most of his costs are outside his fences they are beyond his control. STOPPAGE OF DEVELOPMENT. Many town critics say: “Write off land values and all will be well.” Except for some of our very rich and well placed farms, country lands for years have had no value; they have only had improvement value. Farm development can only continue if improvement costs are to be represented in value just the same as town improvement can only take place if the improvements when completed are to be represented in value. Destroy farm improvement values and farm development will stop, and with the stoppage of farm development city development must stop also. Returns on the farm over 50 per cent, down and costs very little down tell the story of our economic troubles. It is impossible to bring costs down quickly enough to meet the position. A rising exchange helps farm returns while costs are being brought down. Farmers think a free exchange will mean a rising exchange. They argue that the compulsory exchange pool was organised to prevent exchange rising, not to prevent it falling, and if conditions were not such as to enforce a rise in exchange there would have been no exchange pool. This is not a New Zealand problem —it is a world-wide problem. For the last ten years every country in the world has been fighting to bridge the gap between costs and the values of its export products, and with the exception of four, everv country in the world has only been able to meet the position by letting its exchange go. The four exceptions are the United States, Holland, Switzerland and South Africa. The three former made immense sums out of the war, and South Africa has gold as its main export line, which is the only -"•oduct in world-wide demand that has risen in value. , „ „ A start towards economic recovery can only begin when farmers are m a position to pay their way. The Farmlers’ Committee appeals to every town man and woman to think farming during the next few months. It is only by helping the farmers that the town people can help themselves.