THE EXCHANGE RATE

Manawatu Standard, Volume LIV, Issue 88, 13 March 1934, Page 6

THE EXCHANGE RATE

ASSISTANCE TO FARMERS. SIR WILLIAM HUNT’S SURVEY. Following supper at the Palmerston North Rotary Club’s gathering, last night, Sir William Hunt, of V eh'ngton, acceded to a request that he should give a short address on the exchange question. Sir William had already given a lengthy review of economics. The visitor said that costs had become altogether out of alignment with the returns for production. Every' country in the world had consequently reduced its currency to meet internal problems Taking 1000 as the figure operating in 1914, in December, 1928, wages had been 1601, retail prices 1602, wholesale prices 1417, farm produce returns 1642 and farm expenditure 1642. In December, 1932, wages were 1374, retail prices or the cost of living 1283, wholesale prices 1209, farm export prices 730 and farm expenditure 1250. In January, 1934, wages bad been 1362, retail prices 12/2. wholesale prices 1269, export prices 993 and farm expenditure 1150. The farm export prices were still out of alignment with the farm expenditure, he said, but if 20 per cent, were taken off the 993 that would bring it down to 774, with the result that a number of farmers who were just carrying on -would be “crucified.” Farming had to be kept going in New Zealand. It was the most important industry, and was vitally different from others. A mine or a factory could lie closed up, but if a farm were closed for the same time, say five years, then the farmer would have to start all over again with virtually virgin land. Some said we should go bade to the basis of sterling, c.r William added. but conditions that suited England did not suit New Zealand. We had to adjust our currency to make things level. As it happened, the exchange helped the Government income because public revenues fell off during the slump, even though less was produced, because of the lower prices, yet when the higher exchange had come in, even though other factors had operated, the Government revenue had increased. Mr A. Seifert asked the speaker if he thought that New Zealand could take any action leading towards recovery if it were not taken by the other countries.

Sir William replied that he did not think that New Zealand would get back to real prosperity until the rest of the world had done so. If no action were taken, although he did not like it he thought that one of New Zealand’s best weapons was the exchange. It was a drastic measure, but the times warranted it.

In response to Mr H. B. Free, the speaker thought that the unemployed would not be absorbed in industry again until the main purchasing power (which came from the farmers) was restored and industry was set in full motion.