THE EXCHANGE RATE

Manawatu Standard, Volume LIII, Issue 51, 27 January 1933, Page 2

THE EXCHANGE RATE

GOVERNMENT’S ACTION CONDEMNED.

MEETING AT WELLINGTON

WELLINGTON, Jan. 26. At the meeting of business men held to-day, at which a resolution was carried condemning the action of the Government in connection with the exchange, Mr B. Salmond, president of the New Zealand Importers’ Federation, who was entrusted with the moving of the resolution, said they were there to protest in all seriousness against the action of the Coalition Government in putting pressure on the banks to put up the rate of exchange. Fifteen months ago that Government had received a mandate from the people to see the country through times of a troublous nature; it had been returned to power by a majority of people of ali classes and sections. Since then many things had happened. The Government had done some good things—no Government could very well help doing some good things—and it had done some ve'ry ba.d things, but its crowning blunder had been the forcing of the exchange rate up to 25 per cent.

“When I contemplate the members of the Cabinet —I must confess that it is difficult to speak about them in calm language—those ‘wise and honourable gentlemen’ who compose the Cabinet —(laughter) —when we consider their action we must be able in some measure to apportion the blame for it. There is no doubt that the two men in that Cabinet who must bear the brunt of the blunder are the Prime Minister and Mr Coates.” “You will remember that in November last we held a meeting in connection with the action of a group in Parliament,” continued Mr Salmond, “and as the result we went to the Prime Minister as a deputation and put Die question to him. There was no doubt about his reply. Mr Forbes said that the exchange rate was a matter for the banks, and that the deputation would have been more properly placed had it waited on them. That was a plain, definite statement. . . . Then when that gentleman had lulled us to sleep with false promises, most of us went away, on our holidays, believing that the Government would take no action in the matter. In the meantime this Cabinet of wise and honourable men met in secret, and evidently considering' that promises meant nothing, decided that this action was necessary, and forced the banks to raise the rate. Mr Forbes must take the responsibility as Prime Minister.

“Mr Coates can only see one section of the community,” continued Mr Salmond. “In his genius he has said, ‘Let us take the money from one class and give it to the farmers.’ This is the same Mr Coates who was sent to Ottawa. He, as an Empire-builder, who was going to assist trade within the Empire and actually signed the agreement to that effect, by which this country gained certain advantages. But there are two sides to every agreement. The other side was that British trade was to be given fair play in New Zealand, and the excessive barriers against it were to be lowered so as to allow them to compete on level terms with local manufacturers.

“Mr Coates has not kept to that agreement, in letter or in spirit. This action of the Government has broken that agreement. Mr Coates had said that exchange did not enter into the matter at all. That would not deceive a child, and it was utterly wrong.” “The Cabinet has yet time to come to its senses,” said the speaker. “It has been said that the exchange rate has been put up for the benefit of the farmers. Do you believe it?” asked Mr Salmon. “A much better way would be to help the farmer direct by raising money on the open market, so that at least he could keep his fences in repair and keep down the blackberry. I would make the money unattachable, so that it would not got into the hands of the financial agents. . . . LATE MINISTER OF FINANCE.

“I want now,” said Dir Salmond, “to refer to the recent Minister of Finance, the Hon. Downie Stewart. (Prolonged applause and three hearty cheers). He is the only man in the Cabinet who possessed the confidence of the people of New Zealand; he was the only man of ideals, the only one to sav," ‘This is a wrong thing and rather than do it I will resign.’ He probably told the Cabinet that this scheme‘would land them in a mess. I think you will find that whatever Mr Stewart decides to do he will have the great majority of the people behind him.” (Great applause.) Mr Salmond then moved the motion as follows: —“That this meeting most strongly protests against the Government’s'action in arbitrarily increasing the exchange rate on London to 25 per cent, on the grounds, firstly, that such action, after the assurances of the Prime Minister that the matter was one solely for the banks, and that there would be no political interference, is a gross and flagrant breach of public trust and confidence, and, secondly, that the fixation of the rate at an unwarranted high artificial rate is opposed to the interests and well-being of the Dominion as a whole. This meeting views with very grave alarm the decision to impose political control of the exchange rate, and considers that the repercussions from the adoption of such a policy must be dangerous and far-reaching.” SUPPORT FOR MOTION.

In seconding the resolution the Mayor, Mr T. C. A. Hislop, said that on 'his return to Wellington he had been filled with dismay and consternation at the action of the Government over the exchange, which was directly opposed to a solemn undertaking. They had now fought the exchange question for some time. This was the third crisis. The Mayor recalled a meetino- with the Prime Minister and protagonists of high exchange in which it was agreed that the exchange should be a fair and true economic rate. It was Mr Downie Stewart, said Mr Hislop, who had then asked Mr D. Jones what exactly that meant, and did lie agree that the exchange was not to be artificially pegged. Mr Jones had replied that all they wanted was the true economic rate, thinking at that time that it was bound to go up if it were left free. Now they knew that the economic forces were not to have natural play, and that consequently they would not get. out of their difficulties but get deeper into the depression. Mr Hislop referred to his belief that the exchange was to be allowed to retain its natural level, but the Government, having consulted certain authorities, ’and finding that their judgment was not to be trusted, brought over Professor Copland. The representative of one very large institution in this country gave his opinion against the inflation of exchange, but Professor Copland came over a'nd converted him. “Which was the sounder?” asked Mr Hislop, “the opinion of the mere theorist or that of the tried economist who had years of practical experience as a Minister of Finance, and who had recently in London had the advantage of being in touch with the ablest financial brains in the world, and who said that the artificial inflation of exchange was all wrong ? On whom would

you rely, on him or the three local professors and the two fanners?” “In seconding the resolution,” continued Mr Hislop, “I want to say that we are not beaten yet; there is yet time to stop it before there is utter confusion. In some quarters it is believed that the improved outlook in Australia is due to the high rate of exchange, but those with more intimate knowledge of the situation say that the improvement is due more particularly to the political changes. The spirit of confidence, has returned, and that which had been locked up has been freed. It is only by getting away from the artificial and standing by the proved that you can get that return of confidence.”

“There comes a time in the history of individuals and countries when there is a right and a wrong,” said Mr J. Pearce Luke, chairman of . the Wellington Chamber of Commerce. “A fortnight ago the Prime Minister told us that the exchange rate was a matter for the banks, yet on Thursday he pegged the exchange at 25 per cent., indicating clearly to my mind that he was not prepared to face the music. A deputation had waited on him on the Monday, and the Prime Minister had no reason to change his views between the Monday and the Thursday. It was high time the businessmen of the Dominion raised their voices in protest against the burdens that were being forced upon them by political action, said Mr Luke.

Mr C. J. B. Norwood, chairman of the Harbour Board, subscribed to the letter and spirit of the resolution. He mentioned how badly harbour boards were affected by the rise in exchange, particularly those who paid interest in loans either here or in London, and mentioned that in New South Wales the situation had on more than one occasion been saved by the Upper House. Perhaps the Upper House could save this country. After other speakers had addressed the meeting, it was suggested by someone in the audience that the meeting should proceed in a body to the House of Parliament and present the resolution to the Prime Minister, but this idea was not favoured, the chairman giving his assurance that the resolution would reach the Prime Minister that day. PROTEST ENDORSED. Per Press Association. DUNEDIN, Jan, 26. The resolution carried in Wellington by various business and commercial interests to-day, protesting against the Government’s action in raising the rate of exchange, was endorsed at a meeting of the Otago Importers’ and Shippers’ Association this evening.