EXCHANGE RATES.

Waikato Times, Volume 111, Issue 18534, 14 January 1932, Page 8

EXCHANGE RATES.

EFFECT ON DOMINION.

PRIMARY PRODUCERS' POSITION. HIGHER RATES URGED. WELLINGTUN, Wednesday. The removal of restrictions upon exchange rates which, It was 'contended were being hampered with disastrous results to the farmers of New Zealand, was sought by a large deputation representative of New Zealand’s primary producing industries, which waited on the Prime Minister, the Rt. Hon. G. W. Forbes, and all members of the Cabinet, to-day. It was contended that the exchange rates should be allowed to find their own level without the restrictions which were stated to exist under the Government exchange credits pool recently established. , All speakers made particular reference to the plight of the primary producers, and it was' urged that if the exchange rates were freed they would rise from 10 per cent, to about 30 per cent., thus giving farmers a return for their produce comparable with that being received by competitors overseas operating on high exchange rates. The argument was advanced that New Zealand could set about economic rehabilitation as Australia had done, with high rates of exchange, and it was asserted that this was tho only way out of the present difficulties. Conference Favoured. Full 'consideration to the whole question' had been given earlier in the day by representatives of the New Zealand Meat Producers’ Board, the Dairy Produce Export Board, the Fruit Control Board, the Sheepowners’ Federation and the Farmers’ Union, and the deputation waited upon the Cabinet at the conclusion of a lengthy conference... ... ~ .

1 In his • reply the Prime Minister promised that full consideration would be given to 'the'■question, although he pointed .out.that great difficulties would bo presented by an increase in the exchange rate. He was favourable to a suggestion that a 'conference should bo called between- the Government, banks; and primary producers, and it is likely that this course will be adopted. It was announced later 'that Messrs D. Jones, W. A. I.orns, H. .D. Acland and W. D. Hunt had been/appointed to represent the producers on any committee set up to investigate the question. Mr D. Jones, ex-Minister of Agriculture and member of 'the Meat Board, said that the-root of . the trouble wa3 the low price for exports of primary products. Dealing directly with the government’s plan to pool exchange credits, Mr Jones siad that one of the most important facts made clear at that clay’s conference was that if the country were to come through production would have to be maintained and even increased. Any policy that would tend 'to decrease production would he directly against the interests of the farming community and the whole of New Zealand. It had been arranged that the Government should find sufficient money in London to meet its own obligations and those of local bodies. The Government’s determination to meet its commitments was fully endorsed by the producers. The consequences of the formation of the pool, however, would he far-rea'chlng and the producers feared that they would suffer out of all proportion. They suggested that the effect of the Order-in-Council establishing tho pool would be to stop competition for export exchange and so hinder it from finding its own proper level.

Credit Controlled.

The Government and the banks virtually controlled all credit In New Zealand, for the competition with which they were met was Inconsistent. Without the restricting influence of the Order-in-Council there woulcFtiave been a substantial increase in the rate of exchange and that would have been of direct benefit to farmers for the reason that the return on produce sold overseas would have gone up correspondingly. As it was, the only relief the farmer could look for at present was to obtain a greater return through increased production. Other countries had higher rates of exchange and the result was that they could sell inferior goods at a higher price to the producer than the producers of New Zealand were able to get in the open market. This state of affairs tended to decrease New Zealand’s exports. It was quite clear that the Dominion could not continue to produce at the same rate as at present under the existing circumstances. Australia had to find very large sums of monev to meet payments in England, but as a result of her policy of free exchange Australian producers were to-day in a better position than those in New Zealand. Australian politicians were, strongly in favour of higher exchange rates, as also were leading economists and bankers, their ooinion being that the rehabilitation of the Commonwealth could not be brought about in any other way. It was admitted that "a higher exchange rate resulted in the GovernmenUnoving to find some more money in order to meet its obligations in London, hut the advantages of the system far outweighed the disadvantages. If a farmer received full valuo for his exchange on an open market a large amount of money would be set free in New Zealand for providing more employment In production and the Treasury would also receive large sums that could not be paid at the present time. The opinion of the conference was that the exchange embargo should he lifted. New Zealand was the only country in the world that had followed such "a method and the countries which were consolidating their position to-day were those which had freedom as far as exchange was concorned . The 'question was one that required immediate attention. Every week, concluded Mr Jones, the farmers were losing large sums through not getting full value for their exchange and the position was exceedingly serious fiom their point of view. Falluro or Success. Mr W. A. lorns, chairman of the Dairy’ Board, said that, farmers were finding il exceedingly hard to keep up production and it would lie found that Hie use of fertilisers was declining at an alarming pace, if only they could (Continued In next column.)