RATE OF EXCHANGE

New Zealand Herald, Volume LXIX, Issue 21344, 19 November 1932, Page 12

RATE OF EXCHANGE

REASONS FOR INCREASE HON. A. D. McLEOD EXPLAINS URGENT ACTION NEEDED RAISING OF PRICE LEVELS [BY TELEGRAPH —SPECIAL REPORTER] "WELLINGTON, Friday Tho motives actuating those members who have led the movement in Parliament with the object of securing the l.using of tho exchange rate from 10 to 25 per cent, above parity were fully explained in a statement made to-day by the Hon. A. D. McLeod (Government— Wairarapa), who acted as principal spokesman when a section of private members waited on the Cabinet on Wednesday evening. Mr. McLeod said that in view of tho manner/in which his name and the names of others had been prominently associated ■with the present controversy, he felt that the full facts, as far as ho knew them, l.hould now be given to tho public. It. was quito correct that moro than a week ago Messrs. J. llurgest, I. D. Burnett, 11. M. Campbell, K. S. 'Williams and himself, but not Mr. W. P. Endean, had a conversation with tho .Prime Minister, tho lit. Hon. C*. W. Forbes, in the lobby, and had told him there was a danger of a debate being forced on the floor of the House concerning the serious position of primary producers. "We assured Mr. Forbes we- were not in sympathy with such a move, said Mi. McLeod, "but we said that if a debato did take place, many of us would bo placed offside with our constituents if we did not take part, Mr. Forbes thanked us for mentioning tho matter to him, and he told us frankly that the Government was gravely "concerned about tho position of farmers in general, and through them, tho position of all sections of tho community. Ho concluded by suggesting that we interview the general manager of the Bank of New Zealand and hear his views, as the Government's banker, on farmers' problems. "We did so, but beyond discussing tho possibility of bonuses, Sir Henry Bucklcton declined to discuss exchange, apart from any opinion which might be held bv his directors, which, of course, be was not in a position to discuss. This was followed, as is now generally known, by the deputation which waited on tho Prime Minister and his Cabinet on "Wednesday evening. An Approved Statement Continuing, Mr. McLeod said he had not looked for any prominence in that deputation, but the Reform group of the deputation requested him to act as their spokesman. That lie consented to do, but only by way of a written statement which had previously been approved. He assured the Prime Minister that the deputation had no desire to embarrass the Government in any way. Mr. McLeod then read the prepared statement as follows: — "This' deputation represents some 30 supporters of the Coalition, apart from members of the Cabinet, who daily are becoming more perturbed as to the serious position of this country's foundation industry, namely, its great pastoral industry. By its pastoral industry, we mean the industry which, in meat, wool, dairy produce and by-products, is responsible for more than *95 per cent of New Zealand's total exports. "We feel that if something is not immediately attempted here in Islew Zealand to bring the price levels of pastoral products more in line with the costs directly or indirectly borne by the pastoral industry in the shape of wages, interest and other costs, the end of the present exporting season is going to find a vast majority "of pastoral producers insolvent and the economic position of this country seriously jeopardised. Earnest Attempt ITcaded

"We recognise to the full the difficulties of the Government, and this deputation has no wish to add to those difficulties. We, however, honestly feel that ■unless some further earnest and determined attempt is made bv the Government to restore a degree of equilibrium to this country's internal price levels, the national results before next winter is over will be far from pleasant. "We. feel that an adjustment in the internal price level can be brought about only in one of three ways:—(l) By further drastic cut- 7 , in wages and interest; (2) by t!?e payment of substantial subsidies* to'those "in the pastoral industry; (3) by .further raising exchange against sterling through exports. "We do not urge further drastic cuts, more especially in wages, and we cannot support subsidies if provided from borrowed moneys We do, however, believe that much can be accomplished toward all-round relief by the raising of the exchange to at least 25 per cent over sterling, and we feel that every effort should be made toward getting the trading banks of New Zealand to adopt Euch a policy. An Urgent Necessity "We confess to having no clear idea as yet as to what is chiefly aimed at in the setting up of a central bank. If one of the chief aims is to bring New Zealand currency to a par with sterling as carlv as possible; then we believe that a very grave risk is being taken. However, the necessity for the Government attempting something on behalf of the past oral industry is exceedingly urgent, and this is the only reason for so large a deputation of members waiting upon you as Prime Minister of New Zealand." On behalf of the United Party members ol the deputation, Mr. C. 11. Clinkard (Rotorua) then expressed his views brief!v. Mr. McLeod said that, in replying to the deputation, Mr. Forbes and Mr. Coates both definitely stated that the moving up or down of 'he exchange was not a matter for the Government s decision, but for the decision of the banks. They both, however, went on to say that the banks, if doing their duty, could not divest themselves of a national responsibility, which was almost as great as the responsibility of the Government. They said they were both as genuinely perturbed as members of the deputation concerning the serious position which had arisen regarding the country's exports, find they sincerely thanked the deputation for so frankly putting its views before thorn. Mr. Endean's Part i After a few minutes' chat regarding the Central Bank proposals and the danger arising of a need for a general moratorium, the deputation thanked the Prime Minister and withdrew. In justice to Mr. Endean, continued Mr. McLeod, it should be stated that he took jio part in organising the deputation to the Prime Minister, but his anxiety for primary producers and the country generally under tile present deplorable conditions was well known. On Wednesday last, however, Mr. Endean sent the following cablegram to the general manager of one of the largest importing as well as manufacturing firms m the Commonwealth: —"Has high rate of exchange been to benefit of Australia ?" The reply received was as follows: "Definitely yes. Initial immediate, benefit to export producer, ultimately reflected in stabilised price levels and increased puri basing power. General benefits of high exchange now recognised, and difference of opinion is now only whether present rate should bo increased."