AVOID INFLATION

Poverty Bay Herald, Volume LXIII, Issue 18922, 25 January 1936, Page 5

AVOID INFLATION

MINISTRY'S AIM GUARANTEE PRICE PLAN REDUCTION OF EXCHANGE DAIRY MARKETING DISCUSSION WITH BOARD (Special to the Horald.) WELLINGTON, this day. The successful conclusion of discussions with the Daily Board was forecasted- by i the Prime Minister, the Hon. M. J. Savage, in an interview with the Herald correspondent last night. Mr. Savage also discussed freely the Government's guaranteed prices plan and exchange developments. He. stated that there would be a Cabinet meeting on Monday to complete the Government's side of the proposals relating to the' Dairy Board's" plans for organised marketing overseas and the internal marketing of butter, "and there is no difference of opinion," declared the Prime Minister. "Internal marketing, as well as external marketing, will involve. guaranteed prices, and external marketing involves the proper organisation of the British end of it." Reminded of the Government's request that the Dairy Board should suspend Mr. C. P. Agar's visit to England till the conclusion of the negotiations, Mr. Savage was asked if this plan was likely to proceed, and whether the Government would also desire its own representative , to watch the position in England. •'lt has been suggested," replied Mr. Savage, '"'that the Government might have a representative associated with the Dairy Board member, and that has to be decided on Monday. After the Cabinet meeting we will be able to say definitely whether Mr. Agar is going or Hot, and what will be done at the London end, which cannot be left to look after itself." :'• .BASIS OP GUARANTEES The interviewer found the Prime Minister at the present stage of the negotiations ready to freely discuss guaranteed prices. When asked if the Government had come to a conclusion • as to what price would be guaranteed in terms of a butterfat minimum Eayment, he replied that no exact figure ad been named, adding: "A guaranteed price only means that you have to pay *an economic price for the work. You jhave to have some basis for it, and the Government has to fix that basis and supply the money, while the machinery df the Dairy Board will be used for the pay-out. Our job is to carry on the policy the people voted for, and I have no doubt about being able to carry it put, for no insuperable difficulties have arisen in perfecting the details. The utmost goodwill. exists between the Dairy Board and the Government, and if we cannot work successfully together. I shall be greatly disappointed." - "Have you settled the price on a butterfat basis?" Mr. Savage was asked. "The actual basis will be considered by the Government and the board," fie answered. "It will be the economicErica for the man doing the job, and efore the matter is decided, a question involved will., be the readjustment'• of overhead charges on the same basis rs the guarantee of the price all over this country. I have stated that the basis of the guaranteed price will be the average of about eight years to 10 years' prices. • v • . CURBING SPECULATION "In addition mortgage liabilities will have to be placed on the same basis. This will not only save the mortgagor, but also the mortgagee. The basis of the valuation will be what the average man can do, working under average con ditions.

"You ask what are average conditions! We say the average of prices ruling for eight or 10 years. Lending should always be on that basis; production cannbt be on any other basis. Our job is to avoid inflation while at the same time paying the farmer for the servicehe gives." , '"The. farmer cannot have the advantage of the high exchange as well as guaranteed prices," suggested the interviewer.

Mr. Savage agreed, remarking:_•{'Our objective is> to lower the rate of exchange, but we don't want people to get excited, because the rate of exchange will be handled carefully. Some British newspaper editor saysi I have a lot to learn about foreign exchanges. I don't claim to be the last word on the subject, but I think I understand foreign exchange as well as that editor, and 1 know that speculators will be always waiting for a rake-off if they can get any indication at all of what the Government proposes to do. The Government's" job is to see that they do not get any rake-off, and when the rate is reduced it is going to be done with the least possible disturbance to finance and industry. That is our job, and we understand it just as well as the British editor."