DECISION WILL CAUSE AN UPHEAVAL

Chronicle (Levin), 20 August 1948, Page 6

DECISION WILL CAUSE AN UPHEAVAL

WELLINGTON, August 19. "As I listened tonight to Mr. Nash reading his Budget, I felt that, to paraphrase Mr. Churchill 's famous words 'never have I heard the Minister oi Finance say so much that meant so little, ' and then he dropped his" exchange brick, and I felt that 'nevei had I heard a Minister say so little that meant so much'," said Mr. Holland in an interview tonight. "The deeision to appreciate New Zealand currency to parity with sterling, will doubtless cause an upheavaL in most branches of trade. I propose reserving my full comment imtil my Budget speech on Tuesday night. In the meantime it can be said that before any worthwhile opinion can be expressed, a full understanding of Mr. Nash's statement about negotiating- a guaranteed price for primary producers, will he necessary. Moreover, a great deal will depend" on whether sterling is devalued in terms of dpllars and on the attitude of Australia before the full repercussions are appreciated.. "Tlie triinsitional period of bringing New Zealand currency into line with sterling, will be one of verv great difficnlty for traders. in general. Tn tlie long run the effect. will be to rednce prices of goods with an overseas con-' lunt. either i.n raw materials or in fin■isl.e.1 or partly fmished goods. Local manufacturers will be required to meet overseas competition on an entirelv new basis. •>' "The change will have»a sulistantial elL ('1 oi. the comitrv 's fmanees and the •iiiioir';! of iuterest to be found on debt domb'iled overseas. "The uncertain quantity, is the effect 011 primary production which is the foundation industry of New Zealand. "Tbe effect of the change will not be to allow the importation of anotlier ponnd's worth of goods into New Zealand as all payment must be made in sterling. "Onlv a few davs ago the question was asked in the Fouse bv Mr. Langstone and some of his Left Wing supuorters as to whether the Minister of Finance would favourahly consider the ciuestion of deductin^r the equivalent of the exchange rate from the farmers' income so as to apply the' savings to subsidise children 's clothing and other

locally produced prodncis. The Minister 's reply was to the eifeet that such a move would be a breach of the agree-: ment between . Federated - Farmers *and the Governmeflt. One wonders' what' his view is now. .. . / . ' A further point of interest is h'ow the change is affeetecl by New Zealand ratifyig the .Geneva Agreemen-t and tlie special exchange agreemenF which' exprdssly forbids coinpietitive exchange' manipulation. "