EXCHANGE AND PRICES

Waikato Times, Volume 119, Issue 19904, 5 June 1936, Page 6

EXCHANGE AND PRICES

The Government must be in a quandary with regard to its exchange policy. During the election campaign it was explained that the policy of guaranteed prices was a. practical alternative to a pegged exchange. As the new system was introduced the old one would be discarded, and the change would not involve the country in any additional expenditure. That explanation was accepted by the producers, but as soon as the Government decided to restrict guaranteed prices to dairy. produce it made any further progress with the change—over impossible. To have reduced the exchange rates would have meant a reduction in the income of all primary producers, other than dairy farmers, and however high overseas prices may go any reduction in exchange rates will affect the incomes of the producers of meat and wool. And if prices remain stable then no extension of the guaranteed price can be expected. Mr Savage made that clear when he was in Hamilton recently. The Government, he said, would only take action if the marketing of these commodities presented difficulties.

The position to‘day appears that the alternative policy, so strongly advocated, has been strictly limited, and that has made it impossible to effect the exchange adjustments that were promised. The reductions were to be made gradually until the importer could secure sterling at par, but the reductions of the one were dependent on the extensions of the other, and as the extension of the guaranteed price plan has been postponed indefinitely the reductions in exchange rates also appear to have receded. Their fate may he one of continual postponement. 77