Measures to Meet The Depression

Manawatu Times, Volume LIV, Issue 7250, 1 September 1933, Page 7

Measures to Meet The Depression

Ir Ransom Details What Government • Has Accomplished LABOUR’S ATTITUDE TOWARDS COALITION Per Press Association. CHRISTCHURCH, Last Night. Hon. E. A. Ransom (Minister of Lands) entered the campaign in the by-election for the Lyttelton seat by delivering a speech in support of the Coalition Government candidate tonight. He spoke in Lyttelton, a Labour stronghold, but was given an excellent hearing. The crowd was goodhumoured and those members of it who did interject occasionally found the Minister rather more than ■ their match.

At the conclusion of the meeting a vote of thanks to Mr Ransom was carried with acclamation. Mr Ransom discussed the causes of the country’s financial difficulties and the measures taken by the Government to meet the situation. The immediate cause of the country’s financial ills was the loss of national income through tho decline in prices of primary produce. Taking the 1928 prices as a basis, tlio loss up to tho end of 1932 was £67,200,000, made up as follows: 1929, £2,300,000; 1930, £1,370,000; 1931, £21,000,000; 1932, £27,200,000. But, notwithstanding the fall in prices, the value of our exports was beginning to improve, as a result of increased production. During the yenSt ended June, 1933, butter prices declined 13 per cent., cheese 11 per cent., lamb 9 per cent., and mutton 5 per cent., but the value of our exports increased by £2,500,000. By this increased production, restoration of prosperity was assured as soon as prices recovered. The prospects of the wool industry were also very bright. There liad been an important rise in prices and stocks were much lower than for some time.

The depression developed in 1929-30 and since then economies and adjustments had been: 1930, £260,000; 1931, £1,360,000; 1932, £4,320,000; 1933, £3,550,000; total, £9,490,000. As cheap money was regarded by all economists as an essential element toward recovery, the Government had set out on a campaign to bring down all interest Tates. Reductions in the interest on the public debt had secured a net gaiu to the Budget of £570,000. Interest on mortgages and rents under leases had been reduced 20 per cent., with a minimum rate of 5 per cent. By an arrangement with the banks, overdraft rates had been reduced from 7 per cent, to 5 per cent. Why Government Interfered With Exchange Rate

Tie exchange rate has been raised from the 10 'per cent, fixed by the banks to 25 per cent, at the instigation of the Government. The Dominion, as a primary producing country, was in a "very serious position during the closing months of last financial year, and some action was necessary to prevent disorganisation and disruption of primary industries. Tie Government took counsel with three of the Dominion's ablest economists, whoso advice w r as that raising of the exchange rate was the only safe course to follow. The Prime Minister held the opinion that exchange was a matter for the banks, and Mr Forbes was not a man to change his attitude readily, but after examining tho position from all angles, he agreed with Cabinet that a rise in the exchange rate was • the right course in the circumstances. Tie value of the higher exchange policy’to the primary producer for the past seven months was £3,200,000 on a 15 per cent, basis and £5,280,000 on a 25 per cent, basis. Tho Labour Party’s declared policy of guaranteed prices would involve making provision for £20,000,000 annually until prices recovered. This approximated to the cost of the Great War. Contrary to tho arguments of opponents of high exchange, the cost of living had not increased since the exchange was raised. The actual decrease in the cost of living w T as 11 per cent. Mr Hansom declared that Mr E. J. Howard’s statement that the Labour Party was never invited to join the Coalition Party was mere juggling with words. The Labour Party was invited by the Prime Minister through their leader and other representatives of the United Party Committee to join a National Government. After long and numerous sittings of the committee no progress w r as made and the Prime Minister announced that ho had decided either to form a National Government from all the parties in the House or dissolve Parliament and appeal to the country. Mr Holland informed the Prime Minister that his party would not join a National Government. Mr Coates asked for time to consider tho question, and after throe days announced that he was willing to join a National Government. During tho period of tho country’s crisis, Mr Holland again said his party was unwilling to join. As it was impossible to form a National Government of all parties, negotiations were entered into by the United and Reform Parties to form a Coalition Government.