EXCHANGE RATE

Hokitika Guardian, 17 June 1932, Page 5

EXCHANGE RATE

RAISING URGED , MINIMUM OF 30 PER CENT. {By Telegraph— Per Press Association) AUCKLAND, June 16. Declaring' that the/ process of economic deflation in New Zealand is still fiir from complete, and that as a policy, it is fraught with extreme danger, I)r Belshaw, in . addressing the Economic .Society, urged that the exchange rate, should be raised to not less than 30 per cent., and maintained at that leyel until overseas prices became more stable.

He emphasised the gap which still existed between the export price: and internal prices. Dr Belshaw said that on the basis of 1928, the continuance of deflation would require further reductions in award wages, of say, 30 per cent., and in interest and rent, of say, 20 per cent. Nevertheless, the burden of fixed charges, and taxes would still remain unduly heavy and the continued fail in internal price* would result in persistence of low profits of ho. profits, a'ud heavy unemployment. Further,', /.the. -Government's adjustable expenditure would require to be reduced ..from.;. iMl.tettJjaUlifl.UiS-.. to four, /million# ' Clei'T-i' .' tl'e Govern! meilt \yus faced 1 with jm task in balancing the budget at. suih a level of national income. It would !be unwise to expect. relief from a riso in .export price*, He added / that ■ he expected the exchange rate would go up when the pool was abolished and , lie .suggested that an Exchange Control Board be sot up, preliminary to establishing a central bank.