HIGHER EXCHANGE

Northern Advocate, 20 April 1933, Page 6

HIGHER EXCHANGE

JUSTIFICATION CLAIMED TREMENDOUS FALL STOPPED. MR COATES AT PAPAROA, (Special to “Norther*' Advocate.”! PAPAROA, Monday. The Minister of Finance, the Rt. Hon. J. G. Coates, addressed a large meeting of his constituents in the 'Garrison Hall yesterday afternoon. Mr Fred Cullen, of Maungaturoto, presided, and said he hoped that though Mr Coates might not have a cure for the depression he would at all events be able to shed some light on* the gloomy outlook which overshadowed the country today. Mr Coates said that not only were all experts on political and financial matters concerned at problems whichfaced tho nation, but the problems vitally affected the people. He proposed briefly to traverse the steps the Government had taken to adjust the economic position. New Zealand had gained a name for sound finance, ■which must be maintained, and to that the Government was pledged from the time the people placed it in power. He thought it was*, desirable to balance the Budget, but he did not favour balancing it at too great a cost to the people. They might < balance the Budget and end up with every man “on the flat of his back.’’ Finances must be arranged as to give the citizen a chance of making good. Ottawa Outcome. After saying that from the inception of the Coalition Government up to January last £9,500,000 had been saved by reductions in salaries and wages, departmental economies and social economies in the services, Mr Coates spoke of the work at the Ottawa Conference. Among the benefits accruing from it were the restriction. of imports of foreign and Empire meats into the United Kingdom, thus countering the over-supply. This was largely responsible for the maintenance rtf better prices for lamb, which had ruled from 6id to 6 5-Bd. He emphasised the advantages to exporters of butter, cheese, casein, fruit, honey and eggs through the Ottawa negotiations, through the duties imposed on foreign goods. The agreements would be reviewed at the end of 1933. . ,

New Zealand had__ always tried to work Avith. Britain,, and it must be remembered. that tlie British farmer had the right to ask for preference in his OAvn market. New Zealand might have to accept a restriction of imports into Britain. Distance was a tremendous factor in the dairy industry. The actual supply and demand should not regulate output. A plan should be worked out to regulate supplies. The benefits of OttaAva were being felt now, and as the years Avent by they would further be revealed. The exchange policy, said Mr Coates, had been left to each dominion to arrange for itself. Vigorous Defence. Ho proceeded to a A T igorous defence of the Government's action in raising the exchange rate. After a policy of deflation had been pursued for a period it had been deemed wise to administer a small dose of inflation, so as to give the primary producers a chance • to carry on. The Government had practically been forced to do this, or see the people go under.

As an instance of the immediate benefits of the increased rate, he said the average payout for butter had been 7d, although some factories were paying and a few Bd. The payone would have been 4d today had the exchange rate not been raised. A tremendous fall in revenue had been stopped, and wool and meat exports had benefited by an estimated value of £10,000,000. The Government had investigated other suggested means of helping the primary producer, and this rise in exchange rates was the most convenient, comprehensible and complete. The banks had suggested the borrowing of £5,000,000 at 4 per cent, for two years, as a subsidy to the farmers, but the question was how to distribute it. Experts went into the question and found it would not be possible. It might have been done in connection with dairy factories, but the pro rata distribution of a bonus among other lines of farming would have been unfair and impracticable and would have caused caused endless dissatisfaction.

Much opposition had been aroused by the Government’s action. Importers and business men had attacked it, as also the press, but the Government had to walk past these grievances and arrive at the source of the problem. Objectors should remember that if the farmer’s purchasing power was depleted they would seriously suffer also. On the success of the primary producer the whole community was dependent. Australia had been exporting on a high exchange. No criticism had come from the -British Government on New Zealand’s action. Our rate of exchange was still lower than any other part of the Empire. Douglas Scheme Challenged. Challenging the remedy for the nation’s troubles put forward by the Douglas Social Credit advocates, Mr Coates said we should be prepared to discuss any remedy, but points in the proposals required more explanation. He warned his hearers to beware of the man who claimed that if you fol-

lowed him all your troubles Avould be remedied in a ’short time and there. Avould be an abundance of goods, leisure, etc. Currency was not the only cause of the depression. Major Douglas’ A plus B theorem had never been substantiated by any economist or anyone of standing in the Avorld. It was a pretty theory to folloAv, but it would not AAtork. The commission of inquiry set up in England condemned it as impracticable, and Major Douglas' statements before them had been most unsatisfactory.

A number of Douglas advocates in the audience challenged Mr Coates’ condemnation of the Douglas proposals, and there was a brisk interchange for a while. Mr Coates stated that he had no objection to the fullest inquiry being made into the Douglas or any other system. Ho deplored carping criticism levelled at the banks. It was contended by some that the banks wore dominated by Jews, but members of that race wore among the best citizens of the Empire. DEBENTURE INTEREST PAYMENT OPTION. MR ALLTJM’S OPINION. RECENT CASE QUOTED. V (Special to "Northern Advocate.”) AUCKLAND, This Day.

The opinion that where a local body has borrowed money overseas and the debenture interest was, at the option of debenture holders, payable in New Zealand or in London, payment could be made in New Zealand with New Zealand pounds, was expressed at the Auckland Transport Board meeting yesterday by the chairman, Mr J, A. C. Allum. He said this meant the exchange rate did not apply. It was a matter of the greatest importance to local bodies. Mr H. C). R. Mason, M.P., said it would be a matter of some concern to the banks also.

Mr Allum quoted a. recent decision of the English Court of Appeal in the case of the Broken Hill Pty. versus Latham and others, that, where the debenture issued was at the option of the holders payable in Australia nr London payment could be made in Australian currency if the holders exercised the option to be paid in London. This decision, said Mr Allmn, appeared to affect the board. The board referred the matter to the Finance Committee.