EXCHANGE RATE

Stratford Evening Post, Volume II, Issue 225, 21 April 1933, Page 2

EXCHANGE RATE

Government's Action Defended MR. COATES DEPRECATES | CRITICISM Press Association.— Copyright. j Paparoa, April 19.—A vigorous defence of the action of the Government in raising the exchange rate was made by the Minister of Finance, the Kt. Hon. J. G. Coates, in an address at Paparoa yesterday. After a policv of deflation had been pursued for a period, he said, it had j been deemed wise to administer a small j dose of inflation, so as to give the prim- , ary producer a chance to carry on The Government had prflctfcally been forced to do this or see the people go under. As an instance of the immechau? benefits, he said the average pay-out for _ batterfat had been 7d per lb, some factors paying sd, 7d, V,d and a few Bd. The i pay-out would have been 4d to-day had ! the exchange rate not been raised. Thus j a tremendous fall had been stopped. , Wool and meat exports had benefited j to an estimated increase of £1,000,000, continued Mr. Coates. The Government had investigated other suggested means of helping the primary producer and this rise in the exchange rate was the most convenient, comprehensive and j complete. The banks had suggested the . borrowing of £5,000,000 at 4 per cent, for two years as a subsidy to the farmers, I but the question was how to distribute , it. Experts went into the matter and found it would not be possible. It might j have been done in connection with dairy j factories, but a pro rata distribution _of j a bonus among the other lines of farming j would have been unfair and impracticable and have caused endless dissatis- | faction.

Much opposition had been aroused by the Government's action, importers and business had been hit by it and also the Press, but the Government had to walk past these grievances and arrive j at the source of the problem, said the Minister. Opponents should remember | that if the farmer's purchasing power j was depleted, the business community i would suffer seriously also, the fall in I prices affecting all sections. On the success of the primary producer all the community was dependent. Australia had been exporting on a high exchange. No criticism had come from the British j Government on New Zealand's action, j and the Dominion's rate of exchange was j still lower than any other part of the j Empire. Mr. Coates defended the policy as a j clear-cut issue, which came home to j every individual in the country. He read a certified statement covering the operations of a firm controlling 14 farms in Otago which had been tided over by the exchange, a deficiency of £2611 being , converted into a profit of £2OO. The j speaker deprecated the general trend of J criticism, which was to undermine con- \ fidence in those responsible for running j the country's affairs. j