GUARANTEED PRICES

Wanganui Chronicle, Volume 79, Issue 198, 24 August 1935, Page 8

GUARANTEED PRICES

Sir,—“Ecte Numcrare ’’ very ably deals with the Hon. Cobbc’s criticism of the Labour Party’s plan, but still it is not explained how it is to be done. I have read carefully iho plan which refers only to butter, and it is. so far as the publication goes, quite simple. You guarantee Is 3d a pound no matter what the price is and charge the money required for that purpose against imports by “a sort of rate of exchange.’* Now in the first part of the publication the rate of exchange is alleged to be iniquitous and unsound as it is a charge against imports. Let us, however, pass over this obvious inconsistency. Apparently if the rate can be fluctuated with the rise and fall of butter in London then you can guarantee prices. The question then depends upon whether you can fluctuate the rate of exchange. We have seen butter at Jo9s and within three or four months the factories have paid out 4d per lb. No, at that, figure, yott require 275 per cent, increase to reach Is 3d. Let us turn to the importer. He order s £lOOO of goods from London when butter is near Is and by the time the goods arrive butter is 4d or 6d. The importer will have to pay from £2500 to £3750 for this apart from duties or freights. He obviously could not import and the scheme would defeat itself. Wo therefore arrive at this conclu

sion, that the rate of exchange or “sort of a rate of exchange” as the Labour plan call s it cannot be fluctuated. If you are going to charge the amount required against imports and that is what the plan says, then you must do it either by the rate of exchange or by a tariff and if the latter then you are still faced with the same difficulty that you cannot fluctuate tariffs in the manner that would be necessary. But there are mure difficulties yet. The plan talks only of butter. What about wool, meat, honey, fruit and other export commodities? Butter today would require 100 per cent, (based on last year’s pay-out) rate of exchange. Wool requires 200 per coat, to bring it to Is per lb. We have often had wool selling at 2d and 3d per lb in Wanganui. In such cases you might require 300 to 400 per cent, rate of exchange for wool. Tafcr moat and fix the guarantee price of wether mutton at say 25s per 601 b car case. Wo have seen these as low as 3a 6d per carcase on the London market and on more than one occasion 7s to Bs. At the first figure you require about 600 per cent. increase. Now the point is, what rate of exchange are you going to fix upon to guarantee prices for all these commo dities? You are placed in this position, that you have to fix the rate and keep it steady. How. then, can you guarantee the prices as you do not know what selling prices are going to be in the future? All you can do is to make a rough shot at a rate of ex change and then make up any deli ciency by a subsidy, to provide which some taxation must be imposed. And this is not intended by the plan at all All that the Labour Party .night *•<» if they got into power*would be to in creaso the rate of exchange which they so loudly condemn.— 1 am. etc., W. GRAY.