INCREASE OPPOSED

New Zealand Herald, Volume LXIX, Issue 21345, 21 November 1932, Page 10

INCREASE OPPOSED

VIEWS OF IMPORTER

CASH ADVANCES BY BANKS

CONTINUATION IMPOSSIBLE

Opposition to tho proposal to raise the rate of exchange was expressed on Saturday by Mr. Gainor Jackson, chairman of the importers' section of the Auckland Chamber of Commerce, who said the propfial was nothing short of madness.

Even the present adverse exchange rate of 10 per cent was not justified by the stato of tho overseas trade. In the past 12 months New Zealand had enjoyed a favourable trado balance in excess of £12,000,000, and were it not for the close association of this country with Australia, through tho banking institutions, there would be no justification for any adverse exchange rate. Over three years New Zealand's imports were as follows: —l 929, £48,798,000; 1930, £43,026,000; 1931, £24,813,000. If imports in New Zealand were to bo further contracted, it would inevitably react on the Dominion's exports, as theso were definitely determined by imports. If Now Zealand did not provide the wherewithal to those who bought from her there could be no complaint if they were unablo to purchase her goods. A high adverse exchange would tend to reduce imports to vanishing point. " I warn thoso advocates of exchange inflation," said Mr. Jackson, " that the very section that they are seeking to assist, the farmers, will be the section of tho community that will be most adversely affected by high adverse exchange rates. If they are successful in their endeavours to force exchange up to 25 per cent, I predict that within six months the present system of the banks making cash advances to the farmers before shipment of their produce will of necessity have to be substituted by a system by which payment will bo made by the banks after the goods have been shipped to London and sold, and the money can be remitted to New Zealand.

" This will depend entirely on the relationship of imports to the accumulation of funds in London. It may quite' conceivably be six, 12 or 18 months after the goods are shipped before the farmer is reimbursed for his produce. The farming section of the House would be well advised to mark, learn an.d inwardly digest this assured economic reaction to the forcing up of exchange rates. " Admittedly the farmers, like all other sections of community, are having a particularly difficult time, but I submit that the most urgent need of the farmer to-day is ready cash; without it ho cannot exist. From what mythical fund could the banks finance our annual exports of £35,000,000 to £40,000,000 without an equivalent amount of imports? Tho present system of cash advances before shipment could not continue for three months."

MANUFACTURERS' VIEWS

FARMERS' POLICY CRITICISED

[by telegraph—own correspondent] WELLINGTON, Sunday

The following statement was issued by the New Zealand Manufacturers' Federation yesterday " It is somewhat difficult to understand how the leaders of the farmers can reconcile their present demands for inflation per medium of exchange with their attitude in the pre-Ottawa Conference days. It will be remembered in those days that their fight was for a so-called free , exchange. Now, after Ottawa and the concession by Britain of quota systems and preferential tariffs for our produce, our illogical farmers' leaders, with a sad lack of ethics, demand a high pegged oxchange.'

" Again, the farmers' leaders submit that the tariff must be lowered to encourage British imports so as to compensate British people for the concession of quotas and preference. How can the high exchange advocates balance the issue ? Will they deny that by raising and pegging the exchange the tariff barrier will prove so prohibitive that they will debar New Zealanders from any possibility of buying British goods, or will they admit that they are, now that quotas and preference have been approved by Britain, disinterested in providing our quid pro quo, and are therefore concerned only in bringing into operation a system that is designed only to safeguard New Zealand's major curse, inflation of values ?

, " Although our manufacturers recognise that any increase in the exchange means an appreciable increase in tariff protection, they cannot be blinded to the graver dangers encompassed by any departure from the present exchange position, which, if anything, is on the liberal side."