Farmers and Exchange

Gisborne Herald, Volume LXVI, Issue 19998, 25 July 1939, Page 16

Farmers and Exchange

Sir, —In your leader cf.last Friday, in dealing with farmers and exchange, you make clear the position that would be created.-* The farmers would receive an increased income which the consumers would have 'to pay, again reducing their purchasing power and funner restricting our trade with Great Britain. The prospects of remunerative (lading with the Old World do not appear very bright. The enormous expenditure on armaments, heavy taxation, and a huge borrowing programme cannot continue«without seriously affecting the prices of our commodities. Great Britain'is essentially a trading country, buying raw material and selling the manufactured article, and as her expenses increase ::o must her profits, and they can only be maintained either by in-

creased business, which, is most improbable, or a reduction in the price of raw materials. Should war break out. our primary producers may find themselves unable to ship their produce for long periods. Will they then appeal to the Government to purchase their commodites? A guaranteed price, on the other hand, would be a definite safeguard to the farmers themselves and is quite sound in principle; all that is needed is a careful

watch on imports. As the extra money created can only be .spent‘in New Zealand goods and services, it would not enable pmwhases of new motor cars, but it could be spent on development, food and clothing. Your remarks regarding ‘‘New Zealand's policy of inflation” do not appear nearly as logical as the preceding matter. Is not Great. Britain inflating her currency a hundred times as much as New Zealand and spending it entirely on non-productive work, armaments? Does she not have to import a great deal of the material required for war purposes? How would you suggest she is going to meet her commitments, war or no war? Candidly, she cannot, except by taking the extra money required from those countries trading with her and reducing the wages of her workers. New Zealand farmers would be well advised to secure a stabilised .price while the opportunity offers. SERIOUS Ihi his comment on inflation. “Serious” appears to overlook the difference in procedure ns between Great Britain and New Zealand. Last year the Reserve Bank in New Zealand created an additional £14,250.000 worth of credit; for the state and. as the bank points out. in its annual report, this policy had such serious repercusc'ons that the issue of credit had to be discontinued. Great Britain, how-

ever, even for her enormous defence expenditure, does not propose to create credit but, as the Chancellor stated the other day, to utilise the savings of the people, great and small. As for the guaranteed price for sheepfarmers, would not this, also, be a charge on the rest of the community and have precisely' the inflationary effects against which the Reserve Bank has issued a warning in commenting on. the guaranteed price for dairy produce?—Ed., Herald.]