OBJECTION TO CONTROL.

New Zealand Herald, Volume LXIX, Issue 21118, 27 February 1932, Page 12

OBJECTION TO CONTROL.

PROF. GREGORY'S REPORT.

COMMENTS BY MR. MACHIN. OPEN OR ARTrFICIAL RATE. [BY TELEGRAPH. —OWN CORRESPONDENT.] CIIRI ST C H U K CII, Friday. Some comments were made to-day by Mr. W. Maehin, president of the Associated Chambers of Commerce, upon the report furnished by Professor T. E. Gregory, of the University of London, regarding New Zealand's exchange position. "The opinion of Professor Gregory is most interesting arid is entitled to high respect," said Mr. Maehin. "I should like, however, to see the questions that were put to him, so as to understand his answers better. He floes not express any opinion on the question of the New Zealand Government's having commandeered by Order-in-Council the whole of our New Zealand export funds in London since January 1 in order that Government requirements may have first call on exchange. Jt, would be interesting to have his opinion whether this was necessaiy and what will lie its effect—if it is continued—on exchange rates. "The whole of Professor Gregory's remarks seem to be based on the question of the desirability or otherwiso of raising the premium on London money. Ho does not express an opinion whether, jf our exchange market were left open without Government control and interference, it would result in a higher exchange premium /laturally following because of the demand.

"Professor Gregory says an increased premium would be of immediate benefit to the primary producer and does not directly deny that part of the increased receipts would be permanently retained by the farmer. He objects, however, because the influence on tho Government, on wages generally and ori the credit of New Zealand, would have to be taken into serious consideration. These three factors ;:re known and after being weighed by responsible men they are not considered to outweigh the equity of giving the farmer any increased exchange to which an open market would entitle him or the value of that advantage to him if he obtained it. Professor Gregory fears the danger of a movement of this kind being difficult to check once initiated. He assumes its initiation presumably as an active and arbitrary movement, which is a very different thing from a natuial movement of the market which is now Government controlled.

"Finally, Professor Gregory appears to suggest that sterling prices in England may rise and bring with them an inciease in prices to tho New Zealand primary pioducer if we await events, but the trend over our present export season, since Britain went off tho gold standard last September, has not been upward on the average of our export prices. The flight from gold to sterling in Britain occurred shortly before our wool prices hardened somewhat but. curiously enough. Continental and Asiatic competition for wool seems to have been the largest factor in sustaining the market, since then. Meat prices have not benefited, nor butter, although, perhaps, on the whole, Britain s purchasing strength has increased. As for the culminating argument of Professor Gregory and others that, because we have reduced otir imports by 19 millions so as to give us a favourable trade balance of seven millions on our sadly diminished exports income, we should regard this favourably against the serious over-valuation of the New Zealand pound. Does it not actually mean that we shall be able to pay otir debts with the little money we have if we do not try to spend this money in keeping the wheels mir national means of livelihood turning .'