INFLATION OPPOSED

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

INFLATION OPPOSED

" DEVASTATING RESULTS"

ATTITUDE OF IMPORTERS

COMBINED ACTION URGED

"Although inflation may give temporary relief to farmers, it is economically unsound and should be resisted," stated Mr. H. G. Thomson, chairmaji of directors of the Auckland Importers and Shippers' Protection Association, Limited, afc a meeting yesterday to consider tlio proposed increase in the exchange rate. Mr. Thomson said the question was one of great urgency in business circles. There was adequate reason to expect far-reach-ing and serious consequences, not only to business interests, but to tho community as a whole, if the proposal to fix tho exchange rate at 25 per cent wet-o carried into effect. The expected results, indeed, could bo described as devastating, and tho question was one which required the closest attention from all organisations interested.

"Tliero is an influence at the back of tho farmers in this movement, but it has not yet como out into the open," ho continued. "If brought about, tho proposal will cause extremely severe depression." Mr. Thomson added that the views qf tho organisation could be summed up in the following points:—

Seven Reasons Given

1. The serious position that will be created as the result of reduced imports bat h from a banking and a budgetary point of view. 2. The increased cost of living to the wholo of the community, including the primary producer, and thus nullifying to a great extent Ins benefit through exchange. 3. The effect on wages through the increased cost of living. 4. Increased taxation to compensate for lessened customs duty and to cover the increased exchange on Government interest and lepayment of loans.

5. Increased rates to cover the extra cost on local bodies' loans and interest.

6. The inconsistent position that will possibly be created by one exportable commodity, for instance, butter, recovering in price and so not needing tho piotection of exchange, and yet getting a subsidy at a cost to the community. , 7. Tho deflation period, which must inevitably be faced, when imported stocks, held by merchants, must bo depreciated to meet the new goods coming in at lower rate of exchange. Mr. Thomson expressed the opinion that the point regarding a deflation period, which must inevitably bo faced, was tho most serious. As surely as exchange was inflated, ho said, serious deflation would be encountered. Tho results would be severe.

It was stated that tho organisation had taken instant steps to deal with tho problem. Mr. T. Lisle, chairman of tho New Zealand Federation of Importers and Shippers, had been communicated with, and the result had been a meeting in Wellington of trade interests. Objections to a higher exchange rate had been agreed upon, and a deputation would wait upon the Prime Minister, tho lit. Hon. G. W. Forbes. It would be asked that tho proposal should be deferred by Parliament until the return from, England of the Minister of Finance, tho Hon. W. Downio Stewart. Thero had been a stay in the proceedings already for the attempt to hasten tho proposal had been regarded as ominous. Position of Government Several speakers dealt with tho position of tho Government in regard to exchange, it being stated that tho Government policy, according to reports, was one of non-interference. This. belief had been supported by the statements of the Prime Minister and the -Rt. Hon. J. G. Coates.

Referring to a suggestion that the organisation should support the attitude of the Government, Mr. Thomson said that, until the matter was raised in tho House, he did not think tho Government would know its own mind. Mr. Gainor Jackson considered that the Government would not initiate action in forcing up the exchange rate. Tho meeting decided to forward its opinions to tho Dominion federation to assist that organisation in its representations to the Government. At a subsequent meeting of directors, it was agreed to ask the Chamber of Commerce to convene a public meeting of all business associations and organisations interested in exchange.