PRICES AND EXCHANGE

Evening Post, Volume CXV, Issue 37, 14 February 1933, Page 6

PRICES AND EXCHANGE

(To the Editor.) Sir, —One aspect of the raising o£ the exchange rate has not been enlarged on, and that is the effect of the rise on purchases by overseas interests operating in New Zealand. Many ■ fanciful figures have been shown by the protagonists of the highest exchange, but if my supposition is correct those figures will remain pure. fancy. Most of our wool is sold locally by auction and is paid for in New Zealand by credits through the local banks. There is a fair amount of wool shipped on consignment, but this is on!y done usually by the bigger men and by the freezing companies. Judging by the course of prices at the auctions finer wools advanced slightly but the coarser wools did not, thus the small man who expected to benefit from a rise in prices was disappointed. The benefits were conferred on the buyer from overseas who has to provide less money to pay for his purchases owing to lua having received a premium for his money from the banks. The assumption that prices would rise consistent with the rise in exchange was not confirmed. The same applies to dairy produce. Many factories contract to sell their output of butter and cheese to English firms, and it is paid for at time of shipment. Again less money is, needed from England to J

provide the necessary finance. Meat comes. under notice also, and the chief gainers are overseas interests. These firms buy on the hoof and one is not far wrong if one assumes that they would uot raise their prices because the Government' have played with the exchange. Since ■ the rates were raised we have seen from market reports that there has been an actual recession in prices for some of the primary products. Certainly all produce shipped on consignment will benefit from the higher exchange .rates, but for all produce purchased and paid for in New Zealand a gamble was made by our politicians that prices would be raised oy the overseas operators. This did not come off and the banks have to make up the difference. No wonder they insisted on an indemnity! Briefly, a premium is being paid to the overseas operators for buying our produce and the local vender is worse off than he was prior to the rise.—l am, etc., BEAW SCOT.