MERCHANTS PROTEST

New Zealand Herald, Volume LXIX, Issue 21346, 22 November 1932, Page 11

MERCHANTS PROTEST

TWELVE OBJECTIONS

THREAT TO FINANCE SYSTEM

HIGHER GENERAL COSTS

Grave concern at the movement to fix tlie exchange rate at 25 per cent was expressed at a special meeting of more than 30 Auckland merchants and importers in the Chamber of Commerce yesterday. A resolution embodying 12 objections to tho suggested higher exchange was carried.

Tho president of the Chamber of Commerce, Mr. A. M. Seaman, said that the organisation, in communicating with tho Prime Minister, the lit. Hon. G. W. 1< orbes, had held that exchange was a matter in which the Government should not interfere. Although Mr. Forbes had stated that the Government was not bringing pressure to bear on tho banks, it appeared that pressure was being exerted in a certain political quarter. The subject was one for the banks alone.

" If tho proposal is given effect to, it will shake the commercial structure of this country to its foundations," stated Mr. Gainor Jackson, chairman of the importers' section of tho chamber. " I warn those advocates of exchange inflation that, the vea-y section their proposals are designed to assist will bo most adversely affected by high artificial exchange rates. If they are successful, I predict that, within six months, tho present system of the banks making cash advances to farmers before the shipment of produce will have to be substituted by a system of payment only after the goods have been sold in How is the farmer to continue*without ready cash ? "

High' Exchange Not a Cure

The farmers, Mr. Jackson said, were in an unenviable position, but forcing up tlie exchange was not a cure for that. Such an attempt was foredoomed to failure. No banks could continue for long to pay high exchange premiums to exporters for London funds, unless they were assured of being able to dispose of these funds to importers at an equivalent premium. The exchange market would collapse inevitably. On the motion of Mr. H. J. Tuck, the meeting endorsed the Government's policy of non-interference with exchange rates, and asserted that a high, adverse rato without economic justification would bo detrimental to the best interests of New Zealand.

Lower Purchasing Power The. following supporting reasons were set out: — (1) Inasmuch as it will check imports, it will reduce Britain's export trade, thus lessening the purchasing power of the people of Great Britain and reacting on export prices. (2) It will bring about a substantial contraction in imports, thus further reducing revenue from customs and income tax.

(3) It will materially increase unemployment throughout the whole chain of distribution, in warehouses and stores, on the (railways, shipping and transport services.

(4) It will further reduce the purchasing power of a large section of the buying public in New Zealand, thus affecting primary producers, local manufacturers and importers. (5) It will act as an indiscriminate tariff barrier against both raw material and manufactured goods, and it makes no discrimination between the necessaries of ■life and luxury goods, thus further increasing the distress and hardship of the poorer paid classes of the community. (6) It will enormously increase the overseas interest obligations of municipal bodies, harbour boards, power boards and other similar bodies, and will necessitato a substantial increase in local rates, harbour dues, charges for power and other services. . (7) It will inevitably result in increased taxation both direct and indirect throughout the whole community,_ thus further stifling industry and retarding restoration of normal trade conditions. (8) It will materially damage the credit of this country overseas, and will operate against the success of both conversion and new loan issues. .... » (9) It will be a flagrant violation ot both the spirit and letter of tho Ottawa agreement, in that instead of implementing the tariff concessions to which this country is committed, we would in effect be raising further indiscriminate barriers against the products of Great Britain as well as other countries. (10) It will retard the fall in the cost of living and production costs. (11) Further exchange depreciation will probablv result in exchange dumping duties being levied on our exports in overseas countres.

Advances to Farmers 112) If adverse exchange rates are artificially forced up to 25 per cent, the present system of the banks making cash advances to farmers before shipment of their produce will, of necessity have to be substituted by a system by whch payment will be made by the banks ; aft the goods have been shipped to London ai d sola, and (he money can be remitted 'to New Zealand. This will, depend entirely on the relationship of imports to the accumulation of.fan* .in X'r'STgSs'.™ V f the farmer is reimbursed for his produce. In the discussion which followed, several speakers said inflation might protide with temporary re lief, but the position would become worse even agreed to send the ".eating's opinion*to the Prime Mini.tor member of Parliament, and the banks.

higher freight charges

DAIRY BOARD'S POSITION

farmers to carry increase

In spite of existing contracts, increased freight charges on dairy produce anc meat shipped to the London market will be instable in the event o an increase in the exchange rate on L ° ndon ; • , The effect on freights of a higliei ex change was considered by the Dany Produce Board and the Meat Board, in injunction, iu July last, when the troversv was first aroused, Hie JJairy TCoard then advised dairy companies that up to the present the cost of exchange had been met by the shipping companies. The total amount paid for freighby the I is in tie neighbourhood ot £1,250,000, and as by far the biggest \ inn is remitted to London by tlie fffing compares, they claim that exchange has been a heavy burden upon th The shipping companies indicated to the board last July that they could not absorb additional exchange, and in view of the possibility of an increase asked the boards to consider the question of "After doing so the Dairy Produce Board advised that an arrangement had been made by the two boards with the shipping companies that in the event an increase 'in exchange, the industry would have to pay the increase in the telegraphic rate of exchange over and above 10 per cent as it affected freights. I hat is, the shipping companies will ir. absorb the present rate of 1U per cent and farmers will have to meet the balance For the purpose of assessment the rate ruling at the date when a steamer commences loading at any one port was fixed On inquiry at the Auckland office the Dairy Produce Board yesterday, it was learned that the board has not since made any decisions that are likely, to vary this arrangement*