LETTER TO THE EDITOR OUR EXCHANGE POLICY AND THE EXPORTING FARMER

Otago Daily Times, Issue 21537, 8 January 1932, Page 4

LETTER TO THE EDITOR

OUR EXCHANGE POLICY AND THE EXPORTING FARMER

TO THE EDITOR. Sir, —Every thoughtful person in New Zealand realises that the most essential class of people in the Dominion consists of those who are producing for export. There are some who contend that if the farmer would develop the New Zealand market and if the New Zealand consumer got high wages (Mr M'Combs, M.P., suggests £5 per week), then we would all be prosperous! The fact is that we depend on our exporting producers (of wool, meat, butter, cheese, and gold) to find the credits in London to pay for all our imports, many services, and our interest bill overseas.

The high interest rates we had to pay for our recent loans at Home and the fact that we now cannot borrow at all mean that those who are able to establish credits at Home are the really valuable section of our community. It is now obvious that the exporting farmers are really the most essential section of our people. Yet the farmer’s pound is less valuable to-day than ever. His purchasing power is heavily depreciated. And his costs are nto being appreciably reduced. Surely, then, when he is establishing the very necessary credits in London he should get full value for them. Our exchange on London has hitherto been kept down by borrowing. Now we, in effect, cannot borrow. So, if the present rate of exchange was fair when we were borrowing, surely it should be higher now that we are not borrowing in London?

In Australia (as an article in to-day’s Otago Daily Times headed “ New Zealand’s Exchange Policy” indicates) the banks have recognised the value of the exporter by letting the exchange swing up naturally—and even perhaps pegging it up afterwards. This is to the advantage of the Australian exporter. In New Zealand, apparently to ease the Government’s interest bills in London, the exchange is being deliberately pegged down —a method of further penalising the exporting farmer in order to benefit the whole community. This is a subject I commend to the Farmers’ Union. The farmer cannot stand any more penalties. Until the farmer can be enabled to produce without loss, then our Dominion will be in financial difficulties. The first step towards financial stability in New Zealand is to restore the purchasing power of the farmer's pound.—l am, etc., Dairyman. February 6.