The Times SATURDAY, JULY 1, 1939. “The Black Exchange"

Manawatu Times, Volume 64, Issue 153, 1 July 1939, Page 4

The Times SATURDAY, JULY 1, 1939. “The Black Exchange "

Wliat is £1 worth in New Zealand currency? It is worth 15s, or only 13s 3d sterling, according to the official or “black exchange’’ rates respectively. Otherwise stated, our pound may have two values, a nominal one and a real one. The £1 N.Z. is not really worth 15s, but the Government maintains the fiction that it is by an utterly artificial, dictatorial and stringent system oi currency control over external monetary transactions.

Resulting Irom this living in fairyland, as concerns our money’s value, is a most unusual and unwarranted outcome — the penalisation of export producers. Uu every pound of butter, on every fat lamb, and on every bale of wool produced, tile producer thereof is denied his full and justly due returns. He is denied any right to the sterling proceeds irom those exported goods as the sterling is commandeered by the Government. The producer is “paid” below fair returns in New Zealand currency fictitiously over-valued.

For proof of these assertions contemplate the “black exchange” rate. The term is a Continental one to describe unofficial, indeed, illegal, exchange transactions. Wherever there has been exchange control practised, as now in this Dominion, a “black exchange” has sprung into being. So, too, in our case as in that of Germany and other Continental and South American States. On this market £l4O N.Z. is quoted to £IOO sterling as against the nominal £125 rate. The real rate, therefore, exceeds the official one by approximately one-eighth.

Were the exchange let go free, export producers would receive one-eighth more for their produce in gross receipts as at London. When account is taki .1 of processing- and shippingcosts, there would be a nett gain .u producers, at the farm gate, of from one-seventh to one-sixth. This represents 2d lb. buttcrlat, Id lb. on lamb,, and Ijd to lid lb. on wool.

That is the measure of the price producers are to-day paying towards the false financial policy pursued by our Government—a policy both unfair and foolish and one followed as a rule only by dictator-ruled States. France, faced by an extreme financial crisis, even under the Popular Front Radical Government, which was Socialist plus Communist in weight, did not embark upon any such policy as has New Zealand’s Labour Government. In taking this road our Government must stand convicted of culpable ignorance of finance. And even though it be exonerated from any dishonest intentions, the policy followed is to be condemned as one financially dishonest.