OTHER PEOPLE’S IDEAS

Wairarapa Times-Age, 23 May 1939, Page 7

OTHER PEOPLE’S IDEAS

EXCHANGE & IMPORTS (To the Editor.) Sir,—lt is reported that a committee of the Farmers’ Union and Sheepowners’ Federation has issued a manifesto recommending as a means of bringing the country in general and the farmers particularly out of their difficulties, that the exchange is to be made free and raised to 40 per cent. This would attract sterling funds and make restriction of imports unnecessary. The latter is no doubt, true, because if the exchange is made, free our currency would go on the scrap heap, like the German mark, and very few people would have any money to spare either for imported goods or for any other purpose. For prices and costs would rise in much the same proportion as our currency fell in value. Are those gentlemen who drew up this report aware that, according to the League of Nations’ report, 34 countries have instituted strict control of both imports and currency, and so far as I know, they are all on the free exchange and for that very reason import control has been introduced in order to prevent both their currency and their secondary industries from going down. Our imports rose from £3O million in 1919 to £6l million in 1920. We had a deficit of £l5 million on our payments. Our credits in London disappeared and a huge deficit took their place. Our merchants found themselves with millions worth of goods for which there was no immediate sale. The cause was that the Home exporters had been holding up the goods for higher prices and then dumped them on to the unfortunate importer here. If we do not want that to happen again had we not better do as other countries are doing, and for the same reason—to prevent our currency and our factories from going on the scrap heap? How the high exchange acted in the past the following will show: In 1914 we exported 220 million lbs of wool ■and got a little over 9.3 million pounds for it, when there was no exchange and our pound was at 100 per cent of its full value. In 1936, when we had 25 per cent adverse exchange and sterling was only about from 55 to 60 per cent of its face value, we sold 314 million pounds of wool for £13.2 million pounds, which owing to depreciation of our currency by means of the high exchange only represented actual value for about £6 million — about £3 million less than we got in 1914 for only a little more than half the quantity of wool. With the exchange at 40 per cent, the value would only be about 4.5 millions—about £1.2 million lower still. The ease of our meat and butter would work out on much the same lines. Who gets the benefit? London, of course; not only from us but from the whole world, for about 55 nations are either on a pegged or a free exchange with that place. Don’t you think the men, who had the assurance to ask our farmers to demand a free exchange, could do with a little moral rearmament? —Yours, etc., HANS C. THOMSEN. Masterton, May 20.