PROTECTION BY EXCHANGE

New Zealand Herald, Volume LXIX, Issue 21359, 7 December 1932, Page 10

PROTECTION BY EXCHANGE

Returned from a visit to Australia, Mr. J. Fletcher, o[ Auckland, has remarked on a feature of the industrial situation there which should be noted in this country. He was impressed by the number of small industries which had come into existence under the combined shelter of the tariff, the primage duty and the exchange loading on the cost of all imports. This was an inevitable, and by no means remote, consequence of the abnormal conditions created by these devices. Up to a point the situation supports the contention that a high exchange would stimulate industry and provide a measure of employment. It has done that in Australia, but the question nowarising, according to Mr. Fletcher, is whether the cost of it is not greater than the benefit accruing. That question has to be answered before much that is claimed from the high exchange can be conceded as established. There is particular significance in Mr. Fletcher's statement that even with the high and artificial sheltering wall, the complaint of competition from imported goods is heard, and the demand for still further protection is incessant. That again is no surprising development. It is an aspect of the question which must bo faced by the primary producer and those who, with him, demand a raising of the exchange rate to increase his returns in the currency of the country. It has long been contended by the farmers of New Zealand that the burden of flic tariff falls wholly upon them, because they, of all affected, are not able to pass on any of its cost. If that argument is conceded, it cannot be denied that the cost of the exchange premium will also fall on them, thus cancelling the supposed benefit they receive from it. And it must be remembered that if, or when, a return to parity of exchange is effected, there will be strong pressure to have increased tariff protection as a substitute for its shelter by those industries that have come into existence meanwhile. Thus, once again, there is indicated the inadequacy of judging the exchange issue on immediate and obvious results without taking into account consequences which cannot be evaded.