The Southland Times. PUBLISHED EVERY MORNING. “Luceo Non Uro.” TUESDAY, NOVEMBER 5, 1935. EXCHANGE ARGUMENTS

Southland Times, Issue 22730, 5 November 1935, Page 6

The Southland Times. PUBLISHED EVERY MORNING. “Luceo Non Uro.” TUESDAY, NOVEMBER 5, 1935. EXCHANGE ARGUMENTS

Some estimate of the value of Mr P. Batcheler’s use of Labour Party propaganda can be gleaned from his declaration that the exchange costs this country the amount above par, both ways. With many people the idea persists that when the exchange goes beyond par the banks make a lot of money and the cost falls on the Dominion. This is what Mr Batcheler has said. Of course, before the Government raised the rate of exchange to 125 no one said anything about the cost of the exchange rate. Not a word was said by the Labour Party writers or by the monetary systematizes, and yet the rate then was 110, which, according to Mr Batcheler’s ideas would have cost New Zealanders 10 per cent, “both ways.” When the exchange rate was raised the aim was to give the exporters a bonus. This bonus was paid by the people of New Zealand, and it could be paid only by imports, and other charges, so that when critics of this policy now talk of costs they are alluding to what was part and parcel of the scheme fully anticipated and necessary for its working. There is nothing terrible in it. If a bounty were given to the farmers the people would have to pay for it on imported goods and on other charges. A scheme of guaranteed prices would be paid for —and paid for dearly. Only fools persist with the belief that they can get something for nothing. The Labour Party may make much ado about Sweden, but it is obvious that relatively speaking Sweden’s condition was favourable before the monetary control was introduced. Propaganda from the’ Labour Party headquarters may say the unemployment in Sweden is now only one per cent, of tn\' population, but the figures show that at its peak, and before monetary control went into effect it was only 1.46 per cent., so that the achievement of this monetary control is not so remarkable after all. Sweden reduced its unemployment by one-third. If this is an argument for its monetary control, New Zealand’s reduction of its unemployment by 42 per cent, is a stronger argument in favour of the present system which Mr Batcheler derides in passionate and eloquent terms. Those who talk about the stifling of our trade are equally at sea. In the first place it was hoped that for a time the high exchange would put a brake on imports in order to help restore the trade balance. This happened, and then imports recovered, with the renewal of vigour to the Dominion’s trade as a result of increased returns from exports, so that the trade balance became markedly favourable again. Mr Coates has shown that the high exchange has not been a loss to the Budget, because increased returns from taxation have exceeded the costs under other headings. The “cost” to the community as a whole will be approximately the amount produced by the addition to export receipts. In other words, so far as the community is concerned the items cancel each other, and we are left with the fundamental fact • that the exchange leads to a redistribution of national income, not to an enlargement of income, and that these so-called costs are the evidence of that redistribution. To suggest that the primary producers have not received any benefits is pitiable tosh, and allusions to the rise in production costs offsetting the farmer’s gains from the higher return from exports ignore the fact that production costs have not risen to an appreciable extent, while the cost of living has declined to jump 15 per cent, as those who argue this way require. Mr Marchant’s £196 argument, which looks very much like a product of the Labour Party’s propaganda factory, can be disposed of by any farmer who looks at the gross yield of his exported products and reduces the item by about 12 per cent. He will then have what his return would have been if the exchange had remained at 110, or by 20 per cent, if he wishes to know what it would have been if the exchange were at par. A farmer who has a cheque of £3OO would write that amount down by £36 or £6O as the case may be. He has not received £196, but he has received proportionately. . The cuteness of tjiis argument is that the small farmer who hasn’t had anything like £196, because on his production he could not under any scheme, guaranteed prices or

printing-machine finance, will believe he is being robbed by someone through this exchange business. This form of propaganda, fortunately recoils on the heads of those who use it, as soon as the simple facts are exposed.