The Guardian And Evening Star, with which is incorporated the West Coast Times THURSDAY, MARCH 10, 1932. FREE OR PEGGED.

Hokitika Guardian, 10 March 1932, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times THURSDAY, MARCH 10, 1932. FREE OR PEGGED.

“Fhek or pegged,” that is the burning question round about the Exchange issue. The economists have' plumped for a higher exchange, which means pegging. The opponents, ask at the worst for a moderate exchange, rn between, there is a demand for a Tree exchange, so that money will find its true value, under the rules of euppiy and demand, The , economists are in earnest for high exchange to meet the needs of the p;oducer. 11l the ea e of oversea exports, ruling rates on the open market would be augmented bv tbe extra value produced from the exchange, hut nothing is said for the importer who has to pay overseas for his goods. He will be hit very hard, and ‘‘the equality of sacrifice” would not lit there. Bather does it appear that there should be a free rate of exchange, governed by the demand. At present exchange is pegged nominally at ten per cent., Which is not high enough to be a disaster, but high enough to help the fanner with a useful primage on his remittances for produce sold overseas. The economists consider their problem is to produce means or a system whereby tbe spending power of the export producers will bo increased. The improvement would be brought about by an artificial exchange rate, but 'it does not follow that the wealth gained thereby would he available- for ready spending. The thrifty farmer, we are sure, has learnt his lesson, and lie would not spend for spending sake. The needy farmer no doubt, would use any (surplus for debt reduction, and to that extent the amount might go into circulation, but it would mean the premium paid would be a high price fur the net extra amount brought into circulation. Passing from the individual to the nation, it is a fact that the national income is falling more rapidly than that of the individual. The- statisticians tells us while wages have fallen n certain percentage, the cost of living has dropped a. like amount. But national income lia,< fallen 27 per cent.. and m\\| year the drop will reach 40 per cent. There i.s the urgency for a complete national overhaul, and that is |he national duty now. Part of the I it : s crm'- idc’vd can be accomplished by a manipulation of exchange rales, and it is at this point where <aii'dims are most -liwplv divided. The country depends very largely on its production, and tic cure pro-

per.. -il by | lie economist s is a form of ilillahion whereby expo! I prices would l e raised in New /calami oiim ,, " , y. To provide for this jmTea-c, the importers and taxpayers w illd hear Hie brunt. and t he money would be returned (o I lie exporters. Mow far this adjustment would work mil in eoual i| v .of sacrifice. could no| he judged till tested but il is not unlikely there would be a nigger in the fence. Heretofore the country bus left its bank-

ing to the hankers, and they.have not misused the position. It would appear it would be best to leave to thosfe with the practical experience the delicate handling of finance, and not. to take any risk with untried theories, when the law of supply and demand will operate inexorably in the end. A stable linn nee can best be- secured Intrusting the hanking institutions with so much stake in the country to do the right thing at the right time.