HIGHER EXCHANGE

Taranaki Daily News, 19 January 1933, Page 6

HIGHER EXCHANGE

WILL GIVE IMMEDIATE RELIEF VIEWS OF FARMERS. LOWER INTEREST RATE. r , By a five to one majority members of the New Zealand Farmers’ Union and representatives of other agricultural organisations, who met in Wellington on Tuesday with the object of discussing proposals for the relief of the primary producers, passed a resolution advocating that the New Zealand exchange rate be raised to a point at least equal to that of Australia and Argentine competitors. Thirty-five members supported the motion and seven voted against it, the opposition coming from the Hawke’s Bay members of the union and some of the Dairy Farmers’ Union representatives from the Manawatu.

Opposition to the resolution was expressed by Mr. C. A. Wilkinson, M.P. for Egrnont. The question of exchange was a matter of buying and selling. If exchange were lifted to a high rate who was going to buy it? The only possible way of raising the exchange in New Zealand to the level suggested was for the Government to guarantee the banks against loss. Millions of pounds in taxation would have to be raised to cover that. In effect the proposal imposed a tax on British imports, and surely the duty on those goods was sufficient already. The question was quite impracticable unless the Government guaranteed the trading banks against loss, and that was almost impossible. Mr. R. E. Talbot, of Hawke’s Bay, said the arguments advanced by Mr. Wilkinson were just as convincing as those used by the two speakers who supported the raising of exchange. At present they were well past the middle of another export season. The bulk of this season’s export was now out of the hands of exporters. If the exchange hqd been increased at the start of the season the primary producers might have received some benefit. If the .farmers were to he given something extra by way of exchange, it would have to be taken off someone else. No good purpose would be served by going for any patch-up remedy. In his opinion they were on wrong lines and should tackle the reform of the currency and credit systems. , / COMMENT BY MR. POLSON. Mr. Polson said there' was a direct ratio between exports and national income. One-fifth of the -national' income went in taxation. A rise of 15 per cent, in the exchange would create a rise of £12,000,000 in the national income. In Australia goods were cheaper to-day than in New Zealand, while costs in the Commonwealth were falling to a greater extent than in the Dominion. It was true exchange was only a palliative, but unlike general inflation it applied the remedy where it was most needed. A higher exchange was undoubtedly a form of inflation, but at all events it; was a form that could be controlled.

In replying to the discussion, Mr. Begg said some ,of the opposition had been on the ground, that the measure of relief was not sufficient, and something more radical was needed. In his opinion farmers would be wise to take any help they could get. Mr. Wilkinson had raised the question of the Government taking the responsibility for the losses that 'might be incurred by the trading. banks. He believed the Government could undertake a large portion of the responsibility at practically no ultimate cost. Exchange was the cheapest / way the Government could assist the farmer. Others had said that the farmers’ creditors would reap any benefit of an increase in exchange,. and that the farmer would get nothing at all Surely the farmer wanted to liquidate, his debts. If that were done it would improve his position. There was no doubt that increased exchange was straightout inflation, but why should they be afraid of that? It was one way-of getting prices up to the 1914 level. The resolution was then put to the meeting and carried. INTEREST AND TAXATION. Two schemes toward the solution of the farmers’, difficulties were put before the meeting. Mr. C. A. Wilkinson, M.P. (Egrnont), expounded his scheme, details of which have already appeared in the News, and Mr. W. B. Fletcher (Stratford) outlined the remedial measures which he thought ought to be taken. - “Jt is imperatively necessary that most drastic steps should be taken to relieve what is rapidly becoming an intolerable position,” said Mr. Wilkinson. ■ “I am of opinion that nothing short of almost revolutionary measures will do what is required, and the country will, I am sure, respond if the proposed steps are considered to be a satisfactory solution of our chief difficulty.” Interest, rent and taxation, under today’s prices, constituted a burden which made farming unprofitable, and in the end . would tend to general decay, loss of production, stagnation and default, Mr. Wilkinson said.

Mr. Wilkinson’s scheme provides for the freeing of all farm lands - from mortgage liability and for all farm lands over and above what was considered a reasonable area to be resumed by the State without payment for further settlement purposes. “These drastic steps would place the primary producer in a position to compete with any country in the world, and would do more to rehabilitate the country than any other proposal, yet suggested,” Mr. Wilkinson considered. “The main feature of my scheme .is that I propose to bring money values into line with production values.” MR. FLETCHER’S SCHEME. Putting forward his scheme, Mr. Fletcher stated that any form of palliative at the present time, however desirable, would not permanently restore allround confidence—the-first essential toward a sound recovery. He said that most of the valuation of farm lands had been based on the speculative value paid for similar land in each locality, and not upon the productive value. This method of inflating the producing lands had contributed very largely to the present position. An immediate revaluation was therefore necessary.

This valuation would be made by the occupier or owner on a special declaration form, which would contain the necessary information regarding the farm’s operations and carrying capacity. The' valuation would be based upon a gazetted price level for all primary products, and would stand good z for seven years, at the ejld of which tiipe another valuation would be necessary. Various checks would be provided, and in all cases where the present mortgage exceeded the declared value, the mortgagee would be given negotiable interest-bearing bonds. A provision would be made that no'legislation should interfere with existing mortgage contracts, but they would be adjusted allowing registration up to the declared value.

The whole scheme would be managed by a realisation trust board, which would arrange all adjustments, issue valuation forms, collect sales tax, attend to bond interest payments, and redeem bonds from time to. time, as the funds permitted, fileichas fialsk . ~ ’ V*