PRODUCE & MARKET REPORTS FROM DAY TO DAY

Evening Post, Volume CXIII, Issue 31, 6 February 1932, Page 14

PRODUCE & MARKET REPORTS FROM DAY TO DAY

IN SUSPENSE

EATE OF EXCHANGE

SOME UNANSWERED QUESTIONS

"Evening Post," 6th February. I "Enter Rumour, painted full of eyes," about describes the position to-day of Xew Zealand-London exchange. Importing business is said to be practically at a standstill or at least a matter of extreme difficulty, due to the present exchange uncertainty. Last Saturday an article appeared in "The Post" describing the unsatisfactory position as it was then. There is no movement towards finality today. Uncertainty, not to say anxiety, has only been intensified during the week by various reports that have gained currency or an impending sharp rise in the rate of exchange. As matters stand meetings of farmers all over the country, with an unanimity that would be surprising were it not probable that some very effective propaganda work has been done, have passed resolutions demanding what they term "free exchange." They have been influenced, it would appear, in making such demands by the expectation that they will receive in -New Zealand money some 10 per cent, to 20 per cent, more for their produce than the 10 per cent, extra they are to-day receiving over and above the price that produce is realising in London or elsewhere overseas. Their eyes have been turned towards Australia, which now appears to them to be, as it was described, by old geographers, a veritable Australia Felix because the Australian producer' is receiving £125 in Australia for produce 'sold for £100 in London. In New Zealand the banks in association ostensibly agreed that the rate of exchange should remain at 10 per cent., and some of them maintain that it is "free," being based on the Dominion's external trado position and overseas obligations, and other governing factors. The New Zealand Farmers' Union, sitting in Wellington on Thursday, however, carried a resolution, after hearing the general manager of the Bank of New South Wales (Mr. Davidson), to the effect that it supported the demand that the late of exchange should be free. Why? The answer was given by the Farmers' Union president, Mr. W. J. Polson, M.P.: (1) Exchange in London would probably rise to as high as 30 per cent, because of the Government's inability to borrow in London; and (2) an addition of 20 per cent, to the current rate of exchange would add about £8,000,000 to the income...of the primary producer, and so swell "the "national income from its present £120,000,000 to £150,000,000. Mr. Poison added that the Government's revenue was shrinking at a tremendous rate. That is a "fact. With 20 per cent, more on exchange Customs revenue should approach vanishing point. PUBLIC IS APPREHENSIVE. . But mora than farmers and bankers and economists are taking a keen interest in this exchange question, and a mere glance at the correspondence columns of "The Post" will show it. The general public is becoming genuinely alarmed. It does not profess to be able to master the complex problems of currency and exchange, but ■it docs claim to have commonsense enough to understand that if the farmer is to receive £130 for £100 worth of produce somebody will have to make up the difference, and it wants to know who? It will require to be convinced. So far nothing has been said by the farmer advocates of a 20 per cent, or 30 per cent, increase in'the rate to convince it that such an accretion to the farmers' returns will not have to be paid by the people of iN'ew Zealand as a whole. How paid? By increases in prices for all imported goods; by iucreased taxes. How else? Take imported goods; Support of local industry by purchase of goods in competition with imported is' a public duty, provided, local manufacturers take no advantage of costs of imported goods raised: by exchange or by any other cause to inflate the prices, and provided always that the quality of the local article is as good, and as cheap or cheaper than the imported article. But there are innumerable articles and materials that JTeiv Zealand must import, many of them absolutely necessary; some of them, too, already carrying exceedingly heavy duties. What are they going to cost if exchange be raised to 20-or 30 per cent? Just'"that"'much more? No; because the merchant and retailer must increase his ..costs to slightly in addition to his ordinary working profit. Take petrol. The car-user will have to pay say 25 per pent, to 35 per cent, more; and the people who have bread or any other article delivered by motor-van, the people who ride in petrol-driven public vehicles, will have to pay more for such service, because petrol must cost more. Petrol;is not" all. -' " GOVERNMENT DEBT INCREASE. But the worst feature—and the sharp lise-ik the«price-of'imported goods is bad enough—is the great increase that would be made in the Government's bill for meeting interest and other payments in London, if the exchange rate is substantially raised. There is £12,000,000 to be met iv London by the Government this year, and it'is increased to-day by 10 per cent. Where is the money to come from v it is to be increased to 20 or 30 per <:cnt? It can only come out of taxation. Taxes and rates are grievous to be borne already; taxes are eating into the savings of the hard working and the thrifty, and there must be some heavy withdrawals from such .savings before this month is out to meet income tax demands. For the sake of the immediate benefit that the farmer has been told he will receive from a- much enhanced exchange rate the whole of the people, farmers included, are to have their cost of; living substantially increased, and the Government is to be compelled to provide hundreds of thousands of pounds more a year to meet its London payments. If the rate is increased it is inevitable that further inroads will be made by taxes , into the attenuated earnings and depleted savings of the people. Of course,.the farmer can-; not escape some of the burden, but it is' painfully obvious that the- heaviest part; of it will lie upon, the rest of the people. The general ;puhlic-.is now,awake to the' seriousness; o£>, -iaiiaj; --V : exchange question. More than that: People-.are ■•realising that the question;has become apolitical question. If they dread that, being unorganised and unvocal, they may be sacrificed to the Moloch of political expediency, are their fears without cause and without reason?