ACTION JUSTIFIED

New Zealand Herald, Volume LXX, Issue 21399, 25 January 1933, Page 10

ACTION JUSTIFIED

BELIEF OF MR. FORBES

REPLY TO AUCKLAND PROTEST FULL CONSIDERATION GIVEN A reiteration of his expressed conviction that the action of tho Government in raising the rate of exchange to 25 per cent was justified was made by the Prime Minister, tho Rt. Hon. G. W. Forbes, in a telegram received yesterday, by Mr. Hugh Thomson, chairman of the Auckland .Importers' Association. The Prime Minister's message was in reply to a resolution passed last Friday at a meeting of representatives of the major interests of the city, when the action of tho Government was condemned. Mr. Thomson presided at tho meeting. Tho text of Mr. Forbes' reply is as follows:—"I have received your telegram, and have noted the protest and expression of views regarding the increase in the exchange rate. As indicated in my public statement in the pross recently, tho Government has given very full consideration to all aspects -"of tho matter, and is convinced that, having regard to the whole of the circumstances, tho action taken is justified." Mr. Thomson, anticipating Parliamentary discussion of the situation, has now forwarded tho following message to Auckland and suburban members ol Parliament:—"As chairman of the large and influential meeting of Auckland citizens representing all classes of the business community. I consider it my duty to draw your attention to the resolution protesting against exchange inflation. In view of legislation now being considered, you cannot ignore the resolution."

CONCERN FELT ABROAD o MANUFACTURERS ALARMED TRADE DISLOCATION FEARED Evidence that concern is felt outside New Zealand regarding the probable consequences of raising the exchange rate lias been provided in cablegrams received by Auckland business concerns. A leading firm received the following message from its London representative yesterday:—"The exchange increase is causing manufacturers intense alarm. They foresee a complete dislocation of trade, to the mutual disadvantage of both countries, especially following Ottawa." Similar messages have been received by other Auckland firms.

EVILS OF INFLATION DANGEROUS EXPERIMENT EUROPE'S EXAMPLE QUOTED [by telegrath —OWN correspondent] DUNEDIN, Tuesday "We have seen far too much of inflation in its various forms in Europe to be able to look with anything but distrust on the arbitrary pegging of exchange at the high rate upon which your Government lias now decided," said Mr. H. Tronser, representative of a large. German industrial firm, who is now on a visit to Dunedin. Asked what he thought of tho Government's latest move, Mr. Tronser said: "You must remember the country from which I come and also tho fact that we have had an opportunity of seeing for ourselves the effects of inflation in Franco and Belgium, as well as in our own country. It is a dangerous experiment. Once you start it, you can never stop it. You may have very definite ideas as to how much you want it to do for you, but there is no way of stopping inflation once it is established.

"I am convinced and the great majority of opinion in Europe, I think you will find, is similarly convinced that in inflation of the kind that your Government has brought into being, thcro is no profit in the long run. It causes untold difficulties and creates new problems. "The whole trouble is that there is no measuring its effects until those effects are doing their worst for the country. I have seen too much of it, and I know," he. concluded.

AN ENGLISH VIEWPOINT COUNTRY'S GOOD DESIRED THE BLOW TO IMPORTS "Imports into New Zealand are bound to decrease, and all that the importer can do is to accept the ■ situation and carry on," said Mr. D. V. Tomson, of London, managing director of Briscoe and Company, when asked his opinion yesterday upon the raising of tho exchanjjo rate. Mr. Tomson arrived from Australia on Monday to visit his company's branches in the Dominion.

"I should not like to go on record as approving the course that New Zealand Ims taken," he continued, "but I believo that if in the long run it helps the country back to prosperity, opinion in Britain will consider it fully justified. Of course, your situation is quite different from that of Australia, which has large manufacturing industries and lias had an adverse trade balance for quite a long time, whereas you have had a favourable one for years past." Mr. Tomson remarked that having only just arrived in New Zealand he had not had time to form any views upon the high exchange, policy in relation to tho internal situation, although lie was naturally concerned with its immediate effect on prices of imported goods. It was easy to understand the controversy that had arisen, for ho was informed that no New Zealand Government had over before interfered with the discretion of tho banks in regard to exchange rates. In the course of some weeks in Australia he had found business generally to bo improving. It was hard to say just what was the cause of this, but personally he felt that tho buoyant spirit among all classes of tho people had as much to do with it as anything. At present the chief concern seemed to bo tho cricket dispute, and it was Really a relief to get to a country where tho subject was not being worn threadbare all day long. Mr, Tomson spoko hopefully of conditions in Britain as he had loft them last October. Ho remarked upon the number of branch factories being established by foreign concerns, particularly in the south of England, since the imposition of the new duties. The cost of living had not advanced as a result of the recent tariffs and quotas, ho said, and tho country was facing tho future with a good deal of confidence.

WAIUKU FARMERS' RALLY

WIDER MEASURES NEEDED

[from our own correspondent]

WAIUKU, Tuesday

Holding that tho high exchange rate can only at best touch tho fringe of the Dominion's economic problems, tho executive of tho Waiuku branch of the Farmers' Union lias announced that a public rally will be held in the Waiuku Town Hall on Thursday evening to consider wider proposals. Tho meeting is to be addressed by Mr. S. J. E. Closey.