Hokitika Guardian & Evening Star FRIDAY OCTOBER 31st 1919. THE PRESSURE OF EXCHANGE.

Hokitika Guardian, 31 October 1919, Page 2

Hokitika Guardian & Evening Star FRIDAY OCTOBER 31st 1919. THE PRESSURE OF EXCHANGE.

The rate of exchange a s affecting international trade j§ one of tlje factors in determining the cost of living, phis is emphasised in the English papers to hand by the reccent mail, wherein pppiments are passed on the effect of pile fa If in the United States rate of exchange, ■'pfie fluctuation operated adversely to' Britain, -vvifli fhe result that the British paper pound in late August last had fallen in value to 17/-, a discount of 3/- on eyery pound Sperling. This has 'been the most violent drop in recent history and on the large sums of money involved, it can be realised what this 15 per cent discount means in loss in the matter of trade. The rate of exchange is the amount which American bankers are willing to pay for British paper money. the war Britain met the cost of ts imports by / exporting gold or goods. Today it cannot export gold because it is only 8 per cent, of the money in this country; the rest is paper. It says the Daily Mail commenting on the position, we could export goods we should have rto trouble. They would pay for the good s wo receive from abroad. Unfortunately the rate of exchange in the United States has been falling for some time because we hove not been producing and selling the goods that are required to cancel the cost of the food and ra.w material that we buy in that country. Th© decrease i n our coal production has not I J

merely compelled us to import coal from the United States as well as food; it lias also prevented us from increasing our manufactures, as coal is the most vital raw material used in every industry. If in his speech the Prime Minister had faced the situation and had enforced ruthless measures of retrenchment on the great spending departments of the Government, ho would have set a great example to the whole country and stopped the .grave waste that is occurring. In that case the fall in the exchange might not have been accentuated. But he took no action, and did not give the strong lead required. Every man, woman and child, is affected in every detail of life by this fall of the exchange. It means that everj sack of wheat j every tin of beef or fruit, every 'bale of cotton which is bought in the United States costs moie to buy. It -sends up the cost of living; it sends up the cost of the raw material which we must have for our manufactures. It cripples us in every direction. Expenditure will have to be cut down to a point at which it can

be covered, by tne ruses, must consume less an d import less. But, above all, it must produce more, and to produce more it will have to work very hard and to start by increasing its output of coal. As it is, we are not paying our way. We are drawing. post-obits on posterity; the finance of post-obits can only have one end. The conclusions of the London paper indicate bow the drift is going on at Home > and what the real, menace is. Though the position here is less acute, the moral of the matter is no less plain if w e would work out oiu own national financial obligation. The immediate remedy to relieve the situation i s more production to provide foi a greater export to establish firmly tin credit of the country.