RATE OF EXCHANGE

Waikato Times, Volume 112, Issue 18797, 19 November 1932, Page 5

RATE OF EXCHANGE

ACTUATING MOTIVES. PARLIAMENTARY DEPUTATION. OUTLINE BY HON. A. D. McLEOD. WELLINGTON. Friday. The Hon. A. D. McLeod (Government—Wairarapa) to-day explained th,e motives actuating those members who have led the movement in Parliament with 'the object of securing the raising of the exchange rate from 10 lo 25 per cent above parity. It was quite correct that more than a week, ago Messrs J. Hargest. T. B. Burnett, H. M. Campbell, K. S. Williams and himself,'but not Mr W. P. Endean, had a conversation with the Prime Minister, the Rt. Hon. G. W. Forbes, in the lobby, and had told him there was a danger of a debate being forced on the floor of the House concerning the serious position of primary producers. Mr McLeod said he had consented to act as spokesman only by way of a written statement which had previously been approved. This read:

"This deputation represents some 30 supporters of the Coalition, apart from members of the 'Cabinet, who dally are becoming more perturbed as to the serious position of this country’s foundation industry', namely, Its great pastoral industry, which is responsible for more than 95 per cent, of New' Zealand’s total exports. “If something is not immediately attempted here in New Zealand to bring the price levels of pastoral products more in line with the costs directly or indivecUy borne by the pastoral industry ij the shape of wages, interest and other costs, the end of the present exporting season is going to And a vast majority of pastoral producers insolvent and the economic position of this country seriously jeopardised. Toward All Round Relief. “We recognise to the full the difficulties of the Government, and this deputation has no wish to add to those difficulties. We, however, honestly feel that unless some further earnest and determined attempt is made by the Government to restore a degree of equilibrium to this country's internal price levels, the national results before next winter is over will be far from pleasant. “We feel that an adjustment in the internal price level can be . brought about only in one of three ways:—(i) By further drastic cuts In wages and interest; (2) by the payment of substantial subsidies to those in the pastoral industry; (3) by further raising exchange against sterling through exports. "We do not urge further drastic cuts, more especially in wages, and we cannot support subsidies if provided from borrowed moneys. We do, however, believe that much can be accomplished toward all-round relief by the raising of the exchange to at least 25 per cent over sterling, and \ve fool that every effort should be made toward getting the trading banks of New Zealand'to adopt such a policy. “If one of the chief aims of a central bank is to bring New Zealand currency to a par with sterling as early as possible, then we believe that a verv grave risk is being taken." On behalf of the United Party members of the deputation, Mr C. H. Cllnkard (Rotorua) then expressed his views briefly. (Mr McLeod said that, in replying to the deputation, Mr Forbes . and Mr Coates stated that the moving up or down of the exchange was not a patter for the Government’s decision, but for the banks. They, however, went on to say that the banks, if doing their duty, could not divest themselves of a national responsibility, which was almost as great as the responsibility of 'the Government. On Wednesday last, staled Mr McLeod, Mr Endean sent the following cablegram to the general manager of one of the largest importing as well as manufacturing Arms in the Commonwealth “ Has high rate of exchange been benefit to Australia?” The reply secelved was as follows: benefit to export producer, ultimately reflected in stabilised price levels and increased purchasing power. General benefits of high exchange now recognised, and difference of opinion is now only whether present rate should be increased." For and Against. It Is believed that, with the members of the Opposition Included, there are thirty-two members of the House who are opposed to a high exchange. The Government members who are said to be definitely opposed to any alteration are Messrs R. A. Wright (Wellington Suburbs), W. A. Yeitch (Wanganui), H. Holland (Christchurch North), A. ,i. Stallworthy (Eden), and A. Harris (Waitemata. The independents who are behoved to oppose any change are Mr 11. Atmore (Nelson and Mr H. M. Rusliworth (Bay of Islands), and Mr C. A. Wilkinson (Edmont). The Labour Parly has decided that it will not enter into the controversy meanwhile. Although there arc some in the Labour Party who arc entirely opposed to the raising of the exchange rute, It Is understood that others lake the view that some increase is warranted by the present extraordinary conditions, holding that it would probably benefit local manufacturers.

ADAMANT OPPOSITION. RISE WOULD BE CALAMITY. WELLIXGTON, Friday. “ The Associated Chambers view with the greatest alarm the present determined agitation to 11. x the rate of exchange at an artificially high level and strongly urge the Government and Hi o hanks to resist the pressure being exerted to bring this about-," said Mr A. S. Burgess, president of the Association. " It will he a calamity if the agitation is successful. ••.My association long ago declared that tiio rate of exchange should bo permitted to tlud its own level in accordance with supply and demand. The association is dellnitely opposed to ttie arlillcial pegging of the exchange rate, whether at a high or low level. Supply ami demand a! present do not in the least justify a rale in excess of Id per cent., if. indeed, they Justify a rale as high as that, and to peg the rate artificially is inilaliun. " giirlt a step ay proposed would pave a disastrous effect on business. Large tlrms have already stated it will mean they will have to dismiss per* • (Continued in next oolumn.)

haps half their staffs and close up branches. Many concerns may be wiped out altogether. Thero will he serious losses throughout business, heavy additions to the unemployed, and no slight Increase in tho cost of living. The very class that is seeking to benefit, the producers, will meet Ihe reaction in that the price of all commodities will rise, so that the exchange bonus I hey receive with one hand they will pay out again with the other.

“ Moreover, pegging the rale vestrtri lip a grave lirench uf the agreement made at Ottawa, as it would haw the olTeot of increasing a duly and placing a restriction on liritish industry."