RATE OF EXCHANGE.

Waikato Times, Volume 113, Issue 18925, 20 April 1933, Page 2

RATE OF EXCHANGE.

nS INCREASE DEFENDED.

REBULTS ALREADY NOTICEABLE. CRITICISM DEPRECATED. PAPAROA, Wednesday. A vigorous defence of the action of the Government in raising the exchange rate was made by the Minister of Finance, the Rt. lion. J. G. Coates, in an address at Paparoa yesterday. After a policy of deflation had been pursued for a period, 'he 'said, it had been deemed wise to administer a small dose of inflation, so as to give the primary producer a chance to carry on. The Government had practically been forced to do this or see the people As an instance of the Immediate benefits, he said the average pay-out for butterfat had been 7d per lb, some factories paying sd, 7d, 74d, and a few Bd. The pay-out would have been 4d to-day had the exchange rate not been raised. Thus a teremendous fall had been slopped. . Wool and meat exports had benefited to an estimated increase of £1,000,000, continued Mr Coates. The Government had investigated other suggested means of helping the primary producer and this rise in the exchange rate was the most convenient, comprehensive and complete. The banks had suggested the borrowing of £5,000,000 at 4 per cent, for two years as a subsidy to the farmers, but the question was how to distribute it. Experts went into the matter and found It would not be possibl*.' It might have been.done in connection with dairy factories, but a pro’ rata distribution of a bonus among the other lines of farming would have been unfair and Impracticable and have caused endless dissatisfaction. Dependence on Primary Producers. Much opposition had been aroused by the Government’s action, importers and business had been hit by it and also the press, but the Government had to walk past these grievances and arrive at the source of the problem, said the Minister. Opponents should remember that if the farmers purchasing power was depleted, the business community would suffer seriously also, the 1 fall in prices affecting all sections. On the success of the primary producer all the community was dependent. Australia had been exporting on a high exchange. No criticism had come from the British Government on New Zealand’s action, and the Dominion’s .rate of exchange was still lower than any other part of the Empire.

Mr Coates defended the policy as a clear-cut issue, which came home to every individual in the country. He read a "certified statement covering the operations of a firm controlling 14 farms in Otago which had been tided over by the exchange, a deficiency of £2611 being converted Into 9 profit of £2OO. The speaker deprecated the general trend of criticism, which was to undermine confidence In those responsible for running the country’s affairs.