CASE FOR HIGH EXCHANGE

Taranaki Daily News, 31 January 1933, Page 9

CASE FOR HIGH EXCHANGE

FARMERS DEPLORE ATTACK MR. POLSON SUPPORTS POLICY. TARIFF FOR OTTAWA AND COSTS. GREATER ECONOMY ADVOCATED. A meeting at Stratford last night of farmers of North Taranaki deplored “the concerted attack on the Government’s policy to give relief to the primary industries by means of an increase in the exchange rate, a readjustment of tariffs and a general reduction of interest ( rates, believing such a plan to offer not. only a relief to the farming community, but also substantial assistance'to the country as a whole.” . The meeting. urged the Government to proceed whole-heart-edly with' its programme. - ; - Being convinced of the necessity for further reductions in costs the-meeting urged the Government to proceed with the de-rating of farm lands and the substitution of petrol taxation and to exercise the closest economy in Government expenditure hand in hand with its general programme. The meeting, attended by about 200 farmers from North and Central Tara-, naki, was held , in the Parish Hall and the motions quoted above were passed following an address by, Mr. W. J. Polson,, M.P., who explained the case for high exchange, replying to anti-exchange propaganda and setting forth the proposals for a readjustment of tariffs, interest- reductions and derating- of farm lands. Mr. H. E. Blyde, president of the North Taranaki provincial executive of the Farmers’ Union, presided. Something drastic, • said Mr. Polson, was surely necessary in order “to get the farmers out of this mess.” Mr. Neville Chamberlain, British Chancellor of the Exchequer, had said it was clear, a lack of confidence existed between nations.' It was impossible in little New Zealand to influence these world-wide, causes, Mr. Polson said; nevertheless internal conditions could be dealt with, and he stressed the point that the farmer wished to see a fair deal, not only to himself but also to other sections of the community.

SOME ACTION VITAL.

- The chairman said the meeting was called to;try to offset a determined effort to stampede the public into thinking the increase in; exchange would be detrimental not only to the public but also to the farmer.' If. the Government had not tackled the question,' then people would have had cause to say that the Government was failing in its duty. It; was vital that something should be done and it was up to the farmers to show that they appreciated .that the Govern'ment had'done something for the country.. , . ; Mr. Polson congratulated the farmers upon having attended in such numbers at very short notice, as it was felt desirable to let people know what the programme of the Government was. There had been a clamour of objection to the Government’s programme, and the exchange question had been seized on for special criticism. The position today was such that New Zealand could' not be saved unless the most stringent measures were taken to save New Zealand from ruin. The primary industry was the key to the situation, for to save the farmer was to save the remainder of the community. The industry was responsible for the bulk of the wealth of the community; that had been definitely proved. The farmer, Mr.' Polson continued, was standing up to his job, as statistics showed that the New Zealand farmer was producing more per individual than any other farmer in the world. Mr.' Polson had ascertained that the capital' loss to the farming community was nearly £200,000,000. FARMERS’ TROUBLES. The lot of the sheep farmer was practically hopeless unless there was a rise in prices. Many farmers had not even the necessities of life except . what meagre food they could grow on their farms. The result, unless checked, would mean national bankruptcy for the farming community, and he thought that even city business men would admit it. Those who criticised most had no rem-. edy. The position of the dairy farmer to-day was that he could have what was left over from the value of a’ pound of butter-fat after 10-Jd in costs and charges was taken from it

Quoting from figures prepared by the Government Statistician, Mr. Polson said that in 1928-29 the agricultural production was £9,400,000, but to-day it had fallen to £7,800,000. This was not a great fall due in a measure to the assistance given to the wheat-growers. Pastural production between the same years of 1928-29 ‘ and to-day had fallen from £42,300,000 to £19,100,000. The production of the dairy farmers had fallen from £30,400,000 to only £23,100,000. These figures were only to the end of 1932 and took no account of the further drop that had occurred during the early part of 1933.

Mining and other primary production had fallen -likewise, but a significant fact on the other hand was to be found in the position of factory production. Factory production in New Zealand had fallen by only 10 per cent, from £23,700,000 to £21,000,000. Hence it was clear that the cities,' where the factories were established, had suffered but little, and it was from the cities that most of the criticism of the higher exchange was coming. INTERNAL CONDITIONS. They must improve internal conditions. The programme for doing that was discussed at a meeting of representatives of all primary producers, and certain essential measures were agreed on as necessary. The Government’s programme of increased exchange, readjustment of tariffs and interest reduction were included in these measures.

Mr. Polson said the second plank of tariff adjustment would compensate for any increase in costs that exchange might cause. The exchange increase would mean an increase of internal wealth of £4,000,000 or £5,000,000. Statistics over the past year showed that when the export income was a certain figure the national income was three times as much, so the £4,000,000 or £5,000,000 would actually mean £12,000,000 or £15,000,000. That had been Australia’s experience despite the fact that the Australian tariffs were 30 per cent, higher. Moreover the cost of living in Australia was substantially lower than it was in New Zealand. These factors were shown to the audience by means of an official graph on which was traced the exchange rate and cost of living as experienced in Australia.

“I want at this stage to correct a statement in this morning’s News, due, I admit, entirely to my own fault,” Mr. Polson said. “There it was stated that the cost of living in Australia had fallen 30 per cent. This is- true if taken from the peak years, but since 1930 the fall has been only 13 per cent. The cost of living rose slightly at first but declined in the last two years by 13 per cent.” There were ten economists in New Zealand, said Mr. Polson. Seven of them

were in favour of the higher exchange. Only 'one was definitely opposed to it, and the other two had not so far expressed. their opinions. So it was clear that the economist views were overwhelmingly in favour of a high exchange. He quoted extracts from' the considered opinion furnished by the seven pro-exchange economists.

PAYING INTEREST IN LONDON .

People were being told that the country would be' taxed -to, death in order to pay London, continued Mr. Polson. He reviewed the Budgetary position and the amount of iflterest charges due in London, but explained that ..the raising of exchange would not cost the country any more In paying the oversea interest charges—a bale of wool or a pound of butter would just be exchanged for as much or as little as it was before. He admitted, however,, that there .would be a lag of about' a. year before the readjustment reached the Treasury through the Just about onefifth of the national income was collected in taxation to-day,. and - if it continued; at the same rate on? the inflated income the extra amount would’ be enough to pay the exchange and-leave- something, over. That., was the ; economists’ view] also. It was problematical if the extra' £1,000,000 for which the Government pro-; posed to make provision for loss becauseof the higher exchange would be need-’ ed. . '

“Now I want to refer to the inconsistency of anti-exchange propagandists,” said Mr. Polson. “When the farmers wanted a free exchange a while ago they insisted that it should be pegged. Now that the farmers have it pegged they demand that it should be free. When the Government refused to interfere with the banks, it was blamed for letting them run the country. Now that it has interfered, it is attacked for not letting the banks continue to do that. None of these propagandists has offered any , alternative unless it is the policy of Mr. Downie Stewart to do nothing. Has the public realised what, that would mean? Are the propagandists prepared to cut all wages and salaries another 25 per cent., stop practically all.expenditure, reduce public services to a skeleton and let the primary industry go to the wall? How will the importers get on then?” AUSTRALIA’S ACHIEVEMENT. Mr. Polson quoted Australia as an example of how an. inflated exchange could be beneficial. ' Australia, he said, was cutting taxation by £8,000,000 this year, the cost of living was lowered and bonuses of £4,000,000 were being paid to producers. .Were the critics prepared to cut wages and salaries by 50 per cent, and reduce the public service to a skeleton? Boots were imported to the value of £1,100,000, and- boots were manufactured to about the same value in New Zealand. To enable the local manufacturers to operate there were tariffs amounting to £450,000 or £500,000. If the tariffs on boots- were wiped out the amount saved would more than pay the wages' of employees in . the 3000 factories, connected with the boot trade. It was said that the exchange inflation was a breach of the Ottawa contract, but if there was a breach then it would be repaired by the adjustment of tariffs. The third plank of the Government was substantial interest reductions. “If it-cannot be done voluntarily,” the Gov-‘ eminent said, “it will be done by compulsion.” Mr. Polson asked if these three planks in themselves were not .sufficient for all reasonable people to keep the Government in office. ■ “BUSINESS PEOPLE CHANGING.” Mr. T. R. Anderson, chairman of the Stratford County Council, moyed the first motion. He said he had travelled, extensively in .New Zealand recently, and in his opinion the business community was changing over in favour-of the. exchange inflation. He thought the country was definitely behind, the Government in its methods.

In seconding the. motion Mr. H. C. Taylor, Ngaere, said all would agree that the- present depression was the worst within the memory of living men. Farmers were experiencing very difficult times,; but at least they, had a scheme to improve conditions,, and he was extremely pleased to know that they had a Government prepared to fulfil that plan. .‘ . The second motion was moyed by the president of, the Stratford executive of the Farmers’ Union (Mr. M. G. Trotter), who said he had. no hesitation in supporting the, motion, which urged measures designed to assist every section of the community.

Mr. J. Cocker, Eltham, seconded this motion. He said a point he would stress, was the need for a reduction of costs and greater economy in. Government departments. The Government should show the way to private individuals, and that way was an immediate and substantial reduction in the costs in-, volved in funning the country. QUESTIONS ANSWERED. The meeting was then thrown open for general discussion. In reply-to Mr. L. Bunn, Mr. Polson 'said he agreed that the position of the sheep farmer who. had . already sold his wool and sent his fat lambs was very difficult indeed. He would not disguise the fact that exchange inflation should have; occurred earlier in the season. Perhaps that class of producer would have to wait till next year to receive any real benefit, -but meanwhile he should benefit from the Government’s proposal. to reduce interest and the costs of production. To Mr. W. L. Kennedy Mr. Polson said the petrol tax, if used for derating purposes, would not apply to any but road rates.

Mr, M. Davis , said it appeared to, him, that exchange had crippled the London ■market for butter and cheese. Under the Paterson plan the Australians had rushed their. produce on to the British market and New Zealand prices had been adversely affected accordingly. Mr. Polson agreed, but pointed out that the increase in Australian production had tended to cause the ; Paterson plan to become a great deal less effective.

Mr. Polson explained to Mr. W. Sangster how the rise in . exchange would not contravene the spirit of the Ottawa agreement. At Ottawa the agreement with Great Britain included a . clause entitling New Zealand to make altera-, tlons in its internal currency system. Mr. Polson made no secret of the fact that the extra benefit the farmer would derive from the high exchange rate would be found by the remainder of the people of New Zealand, but the latter would gain from the increased velocity in the circulation of money.

To Mr. J. Cocker Mr. Polson said he believed quite a different Bill dealing with the central bank would be brought before the House than was introduced last year.

Mr. Cocker saw a danger that unless it was properly, protected the central bank would become subservient to the great banks of the world. . “I can only say that you' express the same opinion as that held by a great many members of the House,” Mr. Polson said. “I think you can be reassured on that matter.” A vote of thanks to the speaker and the chairman (Mr. H. E. Blyde) was carried.