THE EXCHANGE QUESTION

Otago Daily Times, Issue 21578, 25 February 1932, Page 12

THE EXCHANGE QUESTION

TO THE EDITOR. Sir, — The explanation of the agreement made between the Government and the Associated Banks, as expounded by the chairman of the Associated Banks, Mr J. T. Grose, in this day’s Otago Daily Times does not serve to palliate the wrong done to the exporters of primary produce. I ask, What right have the banks and the Government to select one section of the community—and that section the one most severely struck by the depression—to be exploited in the time of their greatest necessity for the benefit of the rest of the community? Of course, the whole trend and purpose of Mr Grose’s statement is an attempt to persuade us that we are not being exploited. That is the suin total of his argument, in my humble opinion. But consider the contents of the first paragraph of his statement. In brief, he tells us that the Government was faced with the necessity of meeting £12,000,000, “ interest and debt service due in London this year,” and, “ as the banks could not safely undertake this in the ordinary course they stated that only by the licensing of exports” (the farmers’ property) “ and putting the funds through them” (that is. in plain English, giving the Associated Banks a monopoly of the handling of the money realised in London _ on the sale of the farmers’ private property) “ could they undertake to meet such heavy obligations for the Government.” Could there possibly be a more cogent argument in support of the farmers’ side of the question than this statement of Mr J. T. Grose? He tells us that only on condition that our export of produce is impounded, by licensing, and a monopoly of the moneys derived from the sale of it in London (and the credits thereby created, and profits on a “ pegged ” exchange), given the Associated Banks, could they possibly undertake to furnish the Government with the assistance needed—may I add, for the usual consideration. So we have the admission for which I have contended that the banks have dictated the policy which by Order-in-Council, deprives the farmer of the benefit that would accrue to him were the exchange left free. But this is followed by the astounding statement that “ had not some such arrangement as that outlined in the foregoing been made; “ the banks believe that the Government itself—so urgent was the matter —would have had no alternative but to seize all export funds”—(the farmers’ only source of income)—“and handle them on behalf of all concerned.” On the authority of the Associated Banks, mind you, we are told that our financial position is so desperate, so urgent, that the Government had no alternative but to “seize all export funds” or empower the banks as they have done to do it tor them, and yet Mr Grose has the audacity to try to befool an intelligent public into the belief that under financial stress so urgent exchange on London would not rise. Sir Harold Beauchamp, Sir George Elliot, and the Mayor of Wellington are busy assuring the public to the contrary. The sum involved is variously stated at from £8.500,000 to £10,000,000, all derived from primary products, and

thus filched by Order-in-Council from the farmers! For whose ultimate benefit? It would be interesting to know the amount of the net “ rake-off ” that will accrue to the banks. It is useless argument to adduce in support of Mr Grose’s plea that exchange has not been “ pegged ” —the banks’ policy last yea,r, or the year before. The position of the Dominion’s credit to-day in London is vastly different from that of 12 months or two years ago. With no alternative to the Associated Banks’ conditions but that of “ seizing the export funds ” we are left wondering at the abuse poured out on Mr Lang and his plan, or why exception is taken to the Soviet policy of socialising the produce of the farms. Is there any real difference between the “ no alternative ” idea of the Associated Banks and the policy of Stalin the Bolshevist? If there is, my weak intellect fails to grasp it. But the , fact remains, confirmed by the “ no alternative ” statement of Mr Grose, that the credit of the Dominion has ebbed to a lower tide-mark than it hag reached during the last 60 years. Our salvation lies in a speedy readjustment in values all round, in every department of State and industry, with a concentration of our energies on the production of exportable primary products. Production and still more intensive production from the land should be our objective, and those who by “pegging”- exchange or by any other means impede production or dishearten the primary producer are enemies of the Dominion.—l am, etc., W. D. Mason. Middlemarch, February 22.