VOICE OF THE PEOPLE

Taranaki Daily News, 4 September 1935, Page 7

VOICE OF THE PEOPLE

VIEWS ON CURRENT TOPICS —: — MR. SAVAGE AND CURRENCY. DEFLATION OR INFLATION? (To the Editor.) Sir,—Mr. Savage is reported to have said at Stratford last week “it is true, as one Minister said, that Germany inflated her currency and destroyed her internal debt. New Zealand deflated her currency and destroyed millions of pounds of value. Both systems are wrong. Our job is to stabilise the currency.” , (. New Zealand has not deflated her currency at all. By raising the exchange above the normal rate she “depreciated her., currency, which .would have exactly the opposite effect to deflation. Before the exchange was raised £llO (New Zealand) was equal to £lOO sterling. This was increased to £125 (New Zealand)—£loo sterling. This is inflationary. Had our New Zealand pound, however, been altered from £llO (New Zealand) to £lOO (New Zealand) per £lOO sterling it would have been deflation. Mr. Savage proposes to stabilise New Zealand currency. It is stabilised to-day at £125 (New Zealand) to £lOO sterling. At what figure will he stabilise? If the fixed exchange is abolished and the normal rate is less than 25 per cent., then his proposed stabilisation will be deflation and will have the effect which he wrongly attributes to the present exchange rate.—We are, etc., NJZ. WELFARE LEAGUE. Wellington, Sept. 2. MR. SAVAGE’S VIEWS. (To the Editor.) Sir,—There are fallacies behind some of Mr. Savage’s illustrations of which he must surely be aware, but as they are not at once evident to his audience he “gets away” with them. He said “It is a curious state of affairs that in a country where incomes from £5O to £5OOO a year are guaranteed, the Government will not guarantee the incomes of those who produce our exports.” This is one of those arguments the Labour Party is so fond of, but the statement is definitely untrue. A salary for a certain post is fixed by the employer, and the man who takes the position agrees to do the job for that > salary. This is a form of contract. There is absolutely no guarantee in the matter. As to incomes generally, these come from all sorts of sources, according to the work done or investments made. Mr. Savage knows well that these incomes are not guaranteed by anyone. - The guarantee of a salary or income means that if the person who has agreed to pay fails to do so, then the guarantor has to fork out. No income or salary is under such a condition, and the Government would be taking on a colossal liability if it were to guarantee salaries and incomes. This is one of those catchy baits so beloved by Mr. Savage’s party which tickle an audience, until they have time to think the matter out—l am, etc., ’ VERITAS. Stratford, Sept 3. GOVERNMENT CHARGES. (To the Editor.) Sir,—Mr. E. G. Riddle, of Stratford, has consciously or otherwise hit on the main cause of the voluntary depression in New Zealand in his letter to your paper. It is computed that £lOO worth of goods bought in England will cost the consumer in New Zealand £250 to purchase over the counter. The exporter, or shall we say the dairy farmer, sends to England one pound of butter which sells at 9d. The 0d will buy a pair of sox. The farmer receives in his monthly cheque from the factory 9d plus 25 per cent exchange, less charges, freight, etc., and is expected to buy the pair of sox which with Government charges, etc., is Is 3d wholesale. The result is that instead of buying all the sox (or goods) one-third of the goods he should receive for his butter cannot be imported; hence the accumulated funds at London. If we in New Zealand were on the true sterling we shomd buy the sox wholesale . at 9d plus freight, etc., but we are not on sterling- We are on New Zealand price level, and if the Government were to recognise the fact it would have to bring the farmers’ payout to world parity by paying the farmer the true value in New Zealand currency, which is Is 3d per lb of butterfat. j The question is, how can the fair exchange be brought about? The Government takes over the Reserve Bank and removes all interference from the Bank of England and the Bank of International Settlements. When that takes place the Reserve Bank shall pay in New Zealand » currency (or credits) the correct amount that is due to the farmer. By way of explanation let me quote a case where world parity price levels come in. A gentleman sent to a country the sum of £lOO in New Zealand money. When the money was paid to the recipient it was only £5O. He was under the impression that the banks had robbed him of £5O. That is not so. The fact of the matter is tfiat it took £lOO in New Zealand to buy a suite of furniture. In the country to which the money was sent £5O would ~. buy the same suite of furniture. In other words our £1 was worth only 10s. According to the League of Nations Bulletin the cost of living in England is 18 per cent, lower now than in 1913. In New Zealand the cost of living, according to the same source, is 1345 points now against 1000 in 1913, or one-third 1 higher, making nearly 50 per cent, higher than in England. Yet the Government expects to remain solvent while our receipts are in sterling and our expenditure is in inflated New Zealand currency, ’ • > Is it not obvious that the exporter must be paid in the currency of his > country if he can be able to pay his way? If the Government was not under the control of finance it could right the } injustice, and then all .the tom fool legislation of the Government with the blank cheque would be unnecessary, and the people would get their just reward for their labour and above all pay their way, thus . keeping the agreement that they desire to honour without being under the unfortunate necessity of protection of the further legalised act of bankruptcy.—l am, etc., A DAIRY FARMER. Hawena, Sept. 3.