WELLINGTON NEWS

Hokitika Guardian, 26 January 1932, Page 6

WELLINGTON NEWS

farmers and exchange. (Special Correspondent). WELLINGTON, January 24. The problem of exchange continues to engage the attention of business men and farmers. Several > advocates for the latter have voiced their opinions, the latest advocate being Mr W. J. Poison, Dominion President of the Farmers’ Union. Mr Poison starts off by asserting an admitted fact that the whole fortunes of the Dominion rest on the primary producers, and contends that if a fiee exchange meanj to farmers the advantage of an increased return in New Zealand money for their produce thalt would stimulate farm production and spread the burden of cost. It i s absurd to insinuate that an exchange does not exist. Perhaps what is meant is that-by placing an embargo through export licenses the freedom of exchange has been tampered with. This to some extent is correct but the embargo was warranted by the circumstances.

Prior to the polling of London credits, certain export houses, notably the freezing companies, were sellers of London exchange, and recently issued balance-sheets showed that they did remarktably well. The Government has been warned off the London market, and has been requested further to provide at least £1,000,000 per month to meet the obligations oi the State and the local bodies. Naturally the Government approached the banks and asked for their assistance. It wag then pointed out to the Government that the banks could not provide the full amount of the funds required unless there were London credits, and even then it was realised that importers would he penalised foV they would come in for London credits after the Government, consequently there' would be a necessary restriction of imports with the evident decline in Customs revenue.

Sir George Elliot, ex-Chairman of the Bank of New Zealand, has given a simple and lucid exposition of the position. The farmers want the exchange on London raised from 10 per cent, to 30 per cent., so that produce sold in London for one hundred British pounds would be paid for in the Dominion with 130 New Zealand

pounds. If supposing our overseas trade represents £30,000,000 British | the primary producers are receiving ! £33,000,000 in New Zealand, and their 1 claim is that they should receive an j additional £6,000,000 (N.Z. pounds) i and that they would receive tn is ! amount if there was no embargo. This additional £6,000,000 must he borne by the whole community and at a time when Salaries, wages, etc., are much reduced and are likely to be still further reduced. The burden of the inflation will fall heavily on the limited number now in receipt of earned incomes. The domestic trade of the country will receive a further iset-back, less goods will be imported into the country be-cause-there will be less money to pay for such goods, and with a contraction in trade unemployment will increase. An increased exchange rate a,s advocated, and which is simply inflation will, it is said, stimulate production—it may do so, but the inevitable effect of inflating the exchange in favour of the farmer would he to inflate the value of farm lands. Inflated land values have been in impediment to progress. It is claimed that the producers, or the majority of them, are practically bankrupt, and possibly this is true, but the bankruptcy is due not to low prices but to high prices of land. The mistake was made in the early post-war years, when butter for instance was selling at £lB6 per ton in London to write up values of broad acres, and many people bought farms at fancy prices and contracted heavy mortgages which cannot be paid imff because the equity has vanished. Farming is quite a different matter to what is was 20 or 25 years ago. Science and machinery play an important part, and these require capital. It may sound harsh to say so. but if the “lame ducks” among the primary producers were got out of the way it would, in the long fun, be a good thing for the country. A new view of farming and the requirements of farmers is forcing itself to the front, and that view does not visualise farmers receiving State charity every time prices of produce fall