HIGH EXCHANGE

Stratford Evening Post, Volume II, Issue 221, 15 April 1933, Page 6

HIGH EXCHANGE

Reply to Objection

ADDRESS AT CARDIFF

'Almost every day you will see in newspapers and other publications some reference in opposition to the high rate of exchange," said Mr. H. E. Blyde, proof the Farmers' Union, at the Cardiff sident of the North Taranaki executive branch meeting. "Usually these matters arc arranged in such a manner and written so cleverly that even those who were enthusiastic about the 15 per cent, increase are now beginning to have doubts as to its ultimate success." Mr. Blyde classified tho objections to New Zealand's high exchange rate under three main heads. P.:.-'}'. " ■■<■'■'■ opponents contended thrt ''"' ."•• '•■ in dairy produce prices w.is> raising of tho exchange rate. I his argument, however, Could be disregarded when it was noticed that every country cx;j 'i-.'.r.g dairy produce was also selling on' very low markets. Secondly, high exchange was being blamed for the present move to restrict exports into Great Britain. If such was the case, why had Britain not adopted similar tactics against Australia when the rate of exchange was raised there over two years ago, and where an export bounty in the shape of the Paterson Plan was also operating. The idea was further discounted by the fact that negotiations dealing with restrictions were actually in progress before the New Zealand Government took the step of raising its exchange. The position was that the decreased spending power of the people in Great Britain, coupled with the big increase in dairy imports, had so alarmed the British farmer that he had pressed hard for the imposition of restrictions on the imports from overseas.

Higher Costs Fallacy Thirdly, it was said that the higher costs to the producer caused by the operation of the exchange rate had resulted in farmers being worse off. Barbed wire had been quoted as a case in point, but the average farmer's requirements of this commodity were so small that any slight extra cost was scarcely felt. Then the New Plymouth Harbour Board rate had been mentioned, opponents of higher exchange contending that a considerable extra burden would be thrown upon Taranaki farmers in consequence of the increased interest payments which the board would have to make because exchange had gone up.

"What is the position here?" asked Mr. Blyde. His farm at Lepperton was included in the Harbour Board's inner area, and consequently he paid on the higher rate assessment, but even if the rate were to be doubled the extra cost to himself would represent only one per cent, of his income.

Mr. Blyde dealt further with the position created by the increase in the exchange rate on the lines of previously reported speeches and appealed to those present not to be misled by the propaganda being launched against the 15 per cent, increase in the rate of exchange. New Zealand was suffering from deflation, or a contraction of credit. If, therefore, means could be devised to give a fillip to credits without the position getting out of control, a great dsal of good would be done. After all, even the opponents of high exchange agreed that in the conferring of benefits upon the farmer the rest of the community was also receiving direct and indirect benefits.

Mr. Blyde went on 70 speak of the attitude of the Farmers' Union towards this question. The union, he said', had certainly pressed for an increase in the rate of exchange, but it had advocated a coincidental reduction in tariffs applying to imports to New Zealand from Great Britain, and leading ultimately to free trade between the two countries. The union also regarded a reduction in interest charges and revaluation as necessary steps towards the Dominion's recovery.

Mr. H. Clemow said he was inclined to think such benefits as did accrue from the operation of high exchange rate were eclipsed by the disadvantages. He understood the 15 per cent, rise acted as an additional tariff against British goods and served to give yet greater protection to certain "hot house" industries in IMew Zealand.

In reply Mr. Blyde emphasised the union's policy of a 15 per cent, reduction in tariffs going hand-in-hand with the 15 per cent, rise in exchange. He believed the British manufacturer was actually not greatly penalised, because the exchange rate operated only in New Zealand. New Zealand currency only had become inflated. At the same time lie agreed New Zealand manufacturers were benefiting. To Mr. A. O'Sullivan, Mr. Blyde said the high exchange rate would possibly add to the cost of living for a short time, but generally there would be a downward tendency just as there had been in Australia. In this connection he remarked that the position in Australia could be quoted with assurance, although "anti-exchange propagandists" tried to explain that conditions between the two countries were so dissimilar that no parallel could be drawn. "You do not hear of any agitation to lower the rate of the Australian exchange," he said.

"Is it not a fact that Australia's debt has grown to the extent of £54.000,000 since its exchange rose?" asked Mr. O'Sullivan.

Mr. Blyde: "The exact position of the Australian financial position is difficult to determine, but our contention is that it is the taxable capacity of the people that really counts." While on this question he mentioned statements to the effect that the New Zealand Government would have to meet a huge bill under its indemnity to the banks in connection with exchange surpluses. This, he said, might be so had prices ranged at high levels, but on the falling market experienced since the higher exchange commenced to operate he doubted whe-

ther surpluses in -London would be sufficient to meet all demands. In any case he could not see how the Government could be called upon to pay any great sum.

Mr. H. J. Marchant, chairman of the meeting, said that if a high exchange I was really a benefit it should have been i brought about years ago. Mr. A. O'Sullivan: We raised it just ! two years too late. The chairman said the effect in Aus- j Iralia was to keep the British manu- j facturer out of the Commonwealth and to speed up the Australian manufacturer. I To-day a lot of New Zealand's require- I ments were being filled from across the j Tasrnan instead of from Great Britain, i He noticed that a Minister of the Crown was still advocating markets in the East,' but Mr. Marchant said he could not believe that such markets existed. There j were too many firms having world-wide I connections who would have exploited every possible Eastern market long ago.