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Hokitika Guardian, 7 June 1932, Page 4

In tlie past, movements towards prosperity or depression in Now Zealand have, been stimulated by changes in the prices received abroad for our exports. The present depression is due very largely to the reduction of about 40 per cent, in the prices received for exports during the past two seasons. This severe fall in the income from expbrts has drastically reduced farmers’ purchasing power and lienee has reduced the sales, ‘and therefore the purchasing power, of those selling goods and services in the home market. In- this way depression, which hit the farmers first, has been passed on through the rest of the community. The process might be reversed and recovery ensured if export prices were to rise again to levels approximating those of 1928 and 1829. While New Zealand has suffered severely from the decline in prices, she lias escaped the full effects of the fall in gold prices. In the first place, the premium on sterling exchange lias meant that New Zealand exporters have received a lion ay of about 81 per cent, on sterling prices. In tlie second idnee, since Britain's '.suspension of gold last Sen tend se-, British prices have been substantially above the level of similar rr,rices in gold-using coimt"in':. When Britain isiwpe,tided the gold standard and sterling exchange became depreciated, it was anticipated that British ■prices of roods entering: into international trade would rise roughly in proportion to the depreciation of sterling exchange. Actually, the rise between September and March last was, according to the “Economist” index number, about per cent. A g cater rise would have occurred had ■vices expressed in gold not fallen by about 13V per cent, during the same period. Tlier ( > is, therefore, a considerable gap between British prices and gold prices consequent upon the exchange depreciation. But since gold prices have fallen. British

prices have risen less than was anticipated. At the present time, it is widely considered that the world is unlikely to recover prosperity unless a substantial improvement in prices can be stimulated. In alnost alii countries, the abnormally low level of prices lias been accompanied by serious Budget deficits, heavy unemployment, reduced production, and freezing of bank assets, and by trade and exchange restrictions, all of which tend to maintain the existing stagnation in commerce and finance.