EXCHANGE BILL

Hokitika Guardian, 28 January 1933, Page 5

EXCHANGE BILL

IN HOUSE OF REPS.

LABOUR PARTY AMENDMENT.

(Per Press Association — Copyright.)

WELLINGTON, January 28

The Banks Indemnity (Exchange) Bill was inroduced by Governor-Gen-eral’s message when tlie House resumed at 2.30 yesterday, and was read the first time.

Moving the second reading, the Hon. J. G. Coates said that the Government accepted full responsibility for the action which! had been taken in respect to the exchange rate. “I wish to associate myself with the Government’s action,’’ he said. “J. believe it is the right one, and the only one in view of our economic circumstances.” The Government had made an exhaustive inquiry into the country’s economic .position, and every avenue had been explored before the decision was reached.

Continuing, the Minister said that when the exchange rate increased in Australia, the fall in the retail prices had continued. The fall in retail prices had continued when Britain had departed from the gold standard. There might be a momentary pause in the fall of the cost of living. He had seen statements that it was proposed to raise prices of goods by fifteen percent, but he pointed out that all these goods were open to competition, ana competition would soon dispose of any attempt to effect such au increase. Wholesale prices had been falling steadily, but retail prices had been lagging behind. The people could expect a continued fall in retail prices, and the commercial community would be fully justified ill ‘ looking forward to improved business in future as a result of the increase in the national income. The following amendment to the second reading was moved by the Leader of the Opposition (Mr H. E. Holland), seconded by Mr M. J. Savage (Lab., Auckland West): “That this House refuses to accord the second reading to the Bill which fails to provide an adequate method of dealing with the serious economic distress of the country,, as the fixing of the rate of exchange at an artificially high level will raise the cost of living, intensify unemployment, foster unnecessary antagonism between town and country, and afford no permanent help to the farmer, while increasing the financial dif..Acuities of the Dominion.” - -

Moving the amendment, Mr Holland .Js.aidJd.iat. while criticising the. Government’s failure, the Labour Party presented its own alternative proposals. The Party recognised that the first steps to be taken must be towards the restoration and stabilisation of purchasing involved the raising of incomes of both farmers and workers —and also towards the restoration to economic imployment those who were now classed as relief workers. This could only be achieved on a wellplanned basis of producing,and distribution. With effective organisation and utilisation of the country’s credit and currency, and with guaranteed prices to primary producers and standard wages for workers, it was clear that any benefits accruing from the artificial increase rate of exchange could only be of a temporary character. Practically every speaker at recent farmers’ gatherings had made this clear. As he saw it, only the exporting farmers, whose properties were mortgage free, would reap direct benefits, and there were not many farmers without mortgages in' New Zealand. The beneficiaries would be principally the banks and other financial institutions, and stock and station agents. In any case farmers could only benefit if the exchange remained high over a long period. Exchange pegged at a high level would not increase the income of the Dominion. It would only transfer the wealth from one section to another. Mr Holland urged that the Labour Party’s proposal for a guaranteed price to primary producers was a better method than the temporary expedient of increasing the exchange rate. Permanent help for the farmer could only come with a guaranteed market for his goods, and that market was only possible when the incomes of consumers were raised to a point that would enable them to purchase the farmers’ goods. , , The debate was adjourned and the House rose at 5.30 p.m. till Tuesday.

THE PROVISIONS OF THE BILL. WELLINGTON, January 28. The Banks Indemnity (Exchange) Bill insures the banks against lodges that they may 'sustain by reason of the fixation, at the request of the Government, of rates of exchanges on London. The Bank of New Zealand wUI be the agent of the Government for the buyinp and selling of exchange, and it ie authorised to buy surplus exchange held in London by other banks. On application the Bank of New Zealand bar rower to re-yll exchange to other banks at a fixed rat e) and, suh'Cct tr any concessions mutually agreed upon, exchange purchased on behalf of v' Government, rrm;' be paid far in cash or by tr e asury bills. The Bank of New Zealand is empowered to invest the proceeds °f anv exchange nu’-chased under the Act in anv securities in which balances of the public account may for the time being be invested, and money may be borrowed against these securities.