FARMERS’ BOUNTY SCHEME

Taranaki Daily News, 23 November 1932, Page 8

FARMERS’ BOUNTY SCHEME

ATTITUDE OF BANKS. AVOIDING EXCHANGE LIFT. There is significance in the fact that two leading bankers expressed their preference for a bounty to primary producers and their strong opposition to any raising of the exchange rate to an artificially high level, states the Wellington Dominion. Both were agreed that the position of the farmer to-day was , serious, but they maintained that if large scale assistance was to be given to the primary producer, it should take the form of a subsidy. As a matter of fact, all the trading banks in New Zealand are prepared to finance the State on a bounty scheme. Such a proposal actually was made some months ago, but it was not given serious consideration by the Government. It is said that the Prime Minister raised the objections that a loan of, say, £5,000,000 for subsidy purposes would add materially to the country’s debt, that the chief beneficiaries would be stock and station agencies and other institutions to which farmers were indebted, and that the Government would be placed in the position of having to carry all the bad debts.

It was admitted by one of the bankers that the subsidy scheme would involve a debt increase, but he maintained that the advantages not only to the farmer, but also to the community generally, would be very great. Raising the exchange rate to an artificially high level would be attended by very grave results to the community, and ultimately would increase the country’s debt to a far greater extent than would a subsidy or bounty loan. In the latter case the country would go into the matter with its eyes open and would know exactly how it stood. The subsidy scheme was preferable in every way and was a perfectly feasible one. Moreover, it would cause far less disorganisation to the country’s finance than raising the exchange rate to an artificially high level. The banker said it was reliably estimated that a 30 per cent, exchange rate would mean an increased cost to the country, to meet Governmental and local body requirements in London, of over £2,000,000. In addition, due to the furamount to £1,500,000, and there would be the loss of Customs revenue would ther drastic cutting down of imports, a great reduction in the income tax payable by importing and other mercantile businesses. Many importers and other traders would be forced to shut down, thus materially adding to unemployment. On the other hand, a subsidy or bounty to assist the primary producing industries would be justified in many ways, one of the most important being that it would be of material aid in regard to employment. It was admitted that the payment of a subsidy would add to the Government’s budgetary troubles, but not, it was conscheme which was infinitely preferable give earnest consideration to the bounty tended, to anything like the same exbe hoped that the Government would tent as a high exchange rate. It .was to Jo high exchange' rata ’