HIGH EXCHANGE EFFECTS

Taranaki Daily News, 27 January 1934, Page 3

HIGH EXCHANGE EFFECTS

ENGLISH VISITOR’S VIEWS. SUBSIDY WOULD BE PREFERRED. The plea that the New Zealand Government would have done better to subsidise primary industries needing it than to devalue its currency by an artificial high rate of exchange, which has hit British investors hard, was made in an interview by Mr. W. A. Briscoe, managing director of the firm of Messrs,Briscoe and Company Ltd., London, who arrived at Wellington by the Remuera on Saturday. . “When I left England,” he said, “things were better, and I think that there can be no question that the agricultural policy which is the emanation of Major Walter Elliot’s personality is assisting what Would have been otherwise, without any question, a bankrupt industry, I am convinced that any thing that Major Elliot can do in the interests, not only of English agriculture, but also of the agricultural industries of the Dominions, he is both competent and anxious , to do.

“With regard to New Zealand, the thing that puzzles me is the relatively low price of your butter, but when I left England nothing sufficiently definite had been settled to enable an announcement to be made on the subject. We all kndw the arguments against tariffs on foreign produce, and we all know that there must be diffculty with regard to anything in the nature of an embargo. SUBSIDY V. DEVALUATION. “What is puzzling most of us is the decision of the New Zealand Government to devalue its currency, instead of adopting the straightforward method of subsidising any industry which is in need of it. In England we have adopted the method of a subsidy, and it appears to most of us a much more elastic and adaptable method than any such step as devaluation could possibly be. In the case of a subsidy it is possible, say, in the case, of wheat, to say that the cost of wheat is fixed at 45s a quarter. Any difference between that fixed producing cost and market values which is unfavourable to the farmer can be made good to the farmer by the national exchequer. If wheat goes to 30s a quarter, there is only 15s a quarter to be made good. “In the case of devaluation of currency, whatever the market prices of the world are, the'community has still to be saddled with the costs of the deficit to the- primary producer, plus the cost which is the result of the payment of external debts, plus the increased cost of all the importations. That is all saddled on the community, and .if butter went up to 150 s, the community would be still saddled with it. BRITISH HOUSES SUFFER. “I would like to draw attention to the fact that that acts in a cruel and unreasonable way oh all English houses which. have shown their, confidence in New Zealand by investing large sums of money. Such English houses find, one morning, without any economic reason for it, that all their investments in New Zealand are reduced by one-fifth. This obviously makes it exceedingly difficult to pay money entrusted to them on deposit, or otherwise, by English clients. “In the case of a subsidy, the whole community, plus the benefiting section iof that community, pay their portion of all expenses, whereas, if one industry is benefiting, and all the community pays

for it, the professional man, for example, has his living expenses driven up without any portion of the benefit to himself at all. The primary producer may be, and as a class often is, quite a small purchaser of imported goods, so that the professional classes are really saddled with an expenditure out of their due proportion' for the benefit,, of one particular class. STANDARDS OF LIVING. "The experience has been that tariffs by. themselves do not fill the bill. We must have a quota. There is always some country which has a surplus of produce or goods, for which it would rather take, say, 2s 6d than nothing. “I think it may be stated as a fact that produce costs are in the main regulated by the standard of living of the producing country. Japan has had colonies in Korea and Formosa for some 40 years, and has never found it possible to produce agriculturally in competition with the inhabitants of those countries. Speaking from recollection merely, the total Japanese populations of Formosa and Korea are still not much more than 500,000. As the Korean standard is lower than the Japanese, so is the Japanese standard of living below the European, and unless some such steps are adopted as have been taken by Great Britain in the quota system are generally adopted, no tariffs will prevent undercutting by the Japanese. In my opinion the quota system, with a scientific protection of industries, is the solution of the question.” .