The Wanganui Chronicle THURSDAY, FEBRUARY 25, 1932. THE GOVERNOR’S SPEECH.

Wanganui Chronicle, Volume 75, Issue 47, 25 February 1932, Page 6

The Wanganui Chronicle THURSDAY, FEBRUARY 25, 1932. THE GOVERNOR’S SPEECH.

q-'HE Governor-General’s speech makes reference to the Disarmament Conference now sitting at Geneva, to the forthcoming Imperial Conference which is to be held at Ottawa, to the Commercial Treaty between Canada and New Zealand, to the deficit in Government revenue, to the curtailment of public works expenditure, to the recently-appointed Economy Commission, to the more recently-appointed Industries Committee, and it is intimated that the Morgagors Relief Act is to be further amended. Measures are promised for improving the method of unemployment relief, for amending the arbitration system, and “generally for meeting the special conditions which have arisen out of the current economic crisis.” The references which possess the quality of being specific will occasion no great surprise, but the general covering clause which runs “generally for meeting the special conditions which have arisen out of the current economic crisis,” may mean anything, or nothing. It is a phrase/which leaves the dooi’ open for the Government to do almost anything. Docs this include any endeavour on the part of the Government to induce the banks to pay more for bills on London than the banks consider them to be worth? In short, is the Government going to use its influence to have the exchange rate advanced to a high rate, say 30 per cent.? On this, the burning subject of the moment, the Governor-General’s speech is about as helpful as the expression on the face of the Sphinx. On this subject, therefore, each individual is entitled to his own guess. The guess indulged in by the Chronicle is that, despite the appointment of a number of economists to a commission to enquire into the matter, the exchange will not rise, but will remain where it is for some time. A high exchange would be of great benefit to the banks at the present time. They have bought the major portion of this season’s London credits at 10 per cent, premium. To raise the exchange to 30 per cent, would be to make a present to the banks of 20 per cent, on all the credits accumulated in London at the present time without bestowing one jot nor tittle of benefit u-pon the farmers of this Dominion. The sch'eme would be of small advantage to a few farmers who have not yet sold their produce, because they would have to offset against that benefit the inconvenient reactions which would naturally flow from a high rate of exchange. Five of the six banks are agreed that the disadvantages which a high exchange would impose on the community more than outweigh the decided advantages which would accrue to themselves and, therefore, they oppose a high exchange. Further, Sil’ Otto Niemeyer, who recently investigated the Dominion’s banking system, agrees with banking opinion in the Dominion, and Professor Gregory, who was associated with Sir Otto Niemeyer, has now asserted that an advance in the rate of exchange would be dangerous. A high exchange is inflation, and as the National City Bank of New York observes: “Inflation is only a way in, it is not a way out.” It is freely asserted that the Rt. Hon. J. G. Coates is prepared to sweep aside this preponderance of expert opinion and throw Government influence into the scale in favour of a high exchange rate. There is no evidence that Mr. Coates is so minded, unless the appointment of Professor Copland, the adviser to the Bank of New South Wales, to the Committee of Economist is regarded as evidence against Mr. Coates Professor Copland is a pre-committed advocate of a high exchange and his appointment to the committee was wrong. He is there as an advocate and not as an investigator. Some strong influence must have been exercised to bring about this inappropriate appointment of a partisan. Was this the influence of Mr. Coates? The Chronicle does not know. One journal has declared that Mr. Coates “is said to have delivered an ultimatum to Mr. Forbes, that the exchange rate must be increased.” The Chronicle does not know, but it does not believe that any ultimatum has been even contemplated. Mr. Downie Stewart is “stated to have declared himself definitely against an increased exchange.” The Chronicle does know that Mr. Downie Stewart has made no such statement. The guesswork of irresponsible journals is better ignored at the present moment. Nevertheless, in view of the persistence of rumours that Mr. Coates is pressing for a high exchange, in spite of the preponderance of expert evidence against such a course, and more particularly in view of the vagueness of the Governor-General’s speech, Mr. Coates should take counsel with himself to decide whether a definition of his position is desirable or not.