High Exchange Under Fire

Manawatu Times, Volume LIV, Issue 7269, 23 September 1933, Page 7

High Exchange Under Fire

Opening of Debate in House of Representatives

REPEAL OF INDEMNITY BILL SOUGHT

Per Press Association.

WELLINGTON, Last Night.

Introducing the Banks ’ Indemnity (Exchange) Repeal Bill in the House of Representatives this afternoon, Mr. W. A. Veitch said it was simply proposed to repeal last session’s legislation, which empowered the Government to compensate the banks for any losses they might suffer through the compulsory raising of the exchange rate. He had voted against the original legislation and to-day he was convinced that as a result of raising tho exchange, conditions had developed which had proved more harmful than anyone had predicted. Tho effect of tlio Government’s class-conscious attitude had been devastating to the industrial, commercial and wage and salary elements, and the benefits which it had been alleged would accrue to the farming community had been largely imaginary. High exchange nad benefited only that section which was better described as large landowners. There were hundreds of people who were being driven from their homes by economic conditions, which wore largely due to the high rate of exchange. Mr. F. Langstone said Parliament had had no say in fixing the rate of oxehango and alleged that tho action of the Government had allowed unlimited speculation by “those in the know.” Farmers had now freely admitted that the alteration had not benefited them. Mr. W. J. Poison: Nonsense. Mr. A. Harris invited the Government to sponsor tho Bill and repair the wrong it had done earlier in tho year. History had proved every word of the denunciation which had been delivered against the Government’s policy. The administration would lose nothing in prestige if it admitted its mistake and took action to remedy it. Incalculable harm had been done to city dwellers and the benefits claimed for the rural section had not been realised. Commercial development had been paralysed to a large extent and a harsh brake had been applied to importations, with a consequent loss of Customs revenue.

High Exchange Advocates Silent. Mr. R. A. Wright commented on the silence of supporters of the high exchange policy and asked the Minister of Finance to toll the House want would be the cost of .the indemnity to the country. Mr. D. Gr. Sullivan said that what had happened in the case of the Southland Power Board was an indication of the grave difficulties that had been created for local bodies through the depreciation of the currency in the interests of one particular section of the community. The Government had intimated that it would introduce legislation compelling the Southland Power Board to pay. It would bo interesting to see how it would do it. While the Christchurch City Council had mot its obligations in sterling, because it desired to play tho game with the people from whom it had borrowed money, members at the same time resented the additional debt service cost they had to meet through tho Government's high exchange policy. Mr. Sullivan said that if a remreudum wore taken, 1)0 per cent, of the votes would bo against the Government's attitude.

Mr. P. Fraser said that if tho Government members who were supporting tho measure were sincere they should vote the Government out at tho first opportunity. Mr. A. J. Stallworthy said raising the exchange rate had cost Auckland metropolitan local bodies in one year in interest and capital charges the sum of £200,000. Bev. C. Carr said the Government's action had been an attempt to deal with effects instead of causes.

Mr. D. McDougall said the Southland Power Board was prepared to honour its pledges. Every debenture it nau issued stated that interest would be paid in New Zealand pounds and tho board would pay as it had promised. The Government had deflated the currency, but that was not the board's fault. He hoped tho Minister of Finance did not think Ms telegram had frightened the people of Southland. “They are hard to frighten down there,” he added. Mr. It. Semple said he had not met one farmer who claimed any benefit from the high exchange rate. The Bill was read a first time on the voices.