Wairarapa Times-Age SATURDAY, MAY 13, 1939. AN OVERDUE INVESTIGATION.

Wairarapa Times-Age, 13 May 1939, Page 6

Wairarapa Times-Age SATURDAY, MAY 13, 1939. AN OVERDUE INVESTIGATION.

■RECAUSE it. was asked for in January last by representatives n of farming industry who then waited on the Prime Minister, and on other grounds, an announcement that the Government has decided to appoint a Royal Commission, presided over bj a judge of the Supreme Court, to make a thorough ni .y es^B of the sheep farming industry in New Zealand is hke to be welcomed. The investigation thus promised should thio , <■ food deal of light, not only on the particular problems of sheep farmers, but on the general economic difficulties by which the Dominion is at present confronted.

From the standpoint of farmers and of all others concerned, it. is’certainly desirable that any action taken should be based upon the most complete examination of the facts that is practicable and that those, taking it should look well ahead, to continuing as well as immediate results.

At a good many meetings of farmers lately vigorous cemands have been made for the freeing.of the overseas exchange rate—these demands assuming, not without an air of considerable probability, that the New Zealand pound, left to itself, would soon be worth appreciably less than its present figuie of approximately .125 to £lOO sterling. It is even contended with some force that if affairs are allowed to pursue then present trend it will/before long be found impossible to maintain the current fixed ratio of New Zealand-sterling exchange.

In the extent to which the position is capable 01. being controlled, however, any action to be taken calls for very careful consideration and useful guidance should be provided by the investigation about to be made of the sheep farming industry.

The case stated for raising the oversea exchange, or allowing it to rise, is briefly, that in existing circumstances farmer dependent on export returns are penalised, unfair y. y ng i and rising costs within the Dominion. It is maintained that the raising of the exchange would automatically redress this state of affairs by giving the farmer a larger share of the available national income than he is getting at present. over, it is contended that adjustment- on these lines is justified and necessary because a collapse of basic primary industries, on account of costs overbalancing returns, would react disastrously on tlie whole community.

It is not to be denied^that an equitable balancing of the costs and returns of primary and other industries is essential to the general economic welfare and prosperity oi the Dominion. On the other hand, the raising of the oversea exchange, particularly in such circumstances as exist today, would be at best a rough remedy of unequal effect from the standpoint 01. farmers, while it would impose Serious disabilities on othei sections of the community, and ultimately, perhaps, on the community at large.

Any increased share of -the national income given to farmers obviously must be taken away from other sections of Hie community. This would work out in various waxs. lhe prices of all imports would be raised automatically, as would the prices of New Zealand products adjusted at parity with oversea prices. The amount of New Zealand currency needed to meet oversea debt, shipping' freight and other charges would be increased in the extent to which the exchange was raised. It is true that this would mean no increased burden on the country as a whole, since these charges are paid in sterling derived from the sale of export produce. The proportion ol these charges to be met by the non-exporting section of the communitv would bo increased substantially, however.

Raising the exchange would strike a further blow at import trade and to some extent would give added protection to Dominion industries. It has to be remembered, however, that over fiflv per cent of our recent imports have been producers goods and that this emphatically is a country which needs to import machinery and capital goods of various kinds in furtherance of industrial expansion. Our existing secondary industries too, import a great deal of raw and other materials, and even primary industry is by no means independent of imports.

It has to be considered, also, that it is one thing to raise the exchange, as if was raised at the beginning of 3933, in the depth of a depression, and another and different thing to repeat this policy when export, prices, as was pointed out at. a meeting of farmers in Dunedin the other day, are higher than they were in the pre-war years.

One of the most important points to be taken into account is that anv relief - gained by primary export industries from exchange inflation inevitably fades. An increased cost of living intensifies the demand for higher money wages; in one way and another higher costs are passed on and the total volume of costs moves upwards.

In the interests not of farmers only, but of the whole community, a remedy evidently must be found tor conditions in which farming industry is being overwhelmed by inordinately high and increasing costs. It should be possible, however, for the Koval Commission which is to make “a thorough investigation of the sheep farming industry” to point to some more'positive. stable and lasting remedy than further exchange inflation.