AUSTRALIAN OPINION

Evening Post, Volume CXIV, Issue 124, 22 November 1932, Page 8

AUSTRALIAN OPINION

PRACTICAL EXPERIENCE OF HIGH RATE

Australia has.now had a fairly long practical experience of a higla exchange rate, viz., 25 per cent. Is it of benefit to the country as a whole? This, in effect, was the question sent out from Wellington eliciting the opinions ,of those well qualified to give an answer. A well-known and highly esteemed authority, representative- of Australian exporting interests, has sent by cable the following reply in answer' to the above question:—

"The effects of Australia establishing an exchange rate of 25 per cent, below sterling is to hold up a false position and prevent a positively necessary adjustment; costs are not falling or falling very little; transport charges cannot and are not being reduced, holding Government expenditure at a higher figure than should be the- case with raw commodities at present sterling prices. "Big increase in taxation due to exchange on overseas' interest commitments. .

"Making the difference in price between raw materials and.manufactured articles 'too wide; holding land values at above their competitive capacity with other export countries; creating a false sense of values.

"Keeping many inefficient and hopelessly involved" producers in production

for longer than should be the case, thus-prejudicing to an extent sound producers.

."Delaying a situation which eventually has to be faced. "Increase in exchange maystimulato exports, but to the detriment of price level m importing countries." A mercantile company director of high standing and ability replied: "The exporter does not derive any permanent benefit from a depreciated currency, and-from a wider standpoint it creates uncertainty and loss of confidence overseas."

The managing director of a company engaged in importing and manufacturing cabled:—

'Very disturbing and requiring farreaching adjustments. Shut out many import lines and ruined many importers. On the other hand gave impetus to local manufacturers."