PROBLEM

Evening Post, Volume CXI, Issue 114, 16 May 1931, Page 16

PROBLEM

NEW ZEALAND TRADING

AUSTRALIA'S POSITION

"Evening. Post," 16tlf May. "Why should New Zealand be dragged at the heels of Australian exchange? w a question more often asked than thoughtMly considered. The Hon. W Jembei SeeU chairman o? the National Ba^J Xew Zealand, deals specifically with thn, question 'in the London -Financial Times." His remarks are heie <nven in abridged form, with the idea of putting the position as > appears to a London banker with a lifelong experience of New Zealand conditions. Mr. Reeves, Sallan rates, rCfers.to the subsequent imposition of blocking rates bebveen^Aus. trsilm and New Zealand in order, as ne Sint"to^ prevent Australian financier, ffiafcng advantage of the ower rate in a?e as January,-1930, blocking rates were thought out of the question. ?»»**•? not expected that the sis New Zealand banks-ifout- of which are Australian in-stitutions-could be got to agree to such a course." . . .' ■;. THE BLOCK RATE. : 1 By March. 1930, things were bo .much worse that lie New Zea and banks, feeling the ground' moving under their feet decided that something must be done. .Blocking rates Were imposed on the transmission of money across the Tasman Sea. "It was thought to soften the blow bj keeping thfe-'i'ates-dOWtt on genuine trading' bills" and-; trahsactibitsi': -and applying prohibitive-rates-to financial dealings, ilie rest'of the-year-was taken :U P: with. a_determined; effort: to keep the rate of New Zealand exchange on London "at about o per cent., and at the same.time to/avoid the step -to which banks in Australia had been driven of 'rationing' exchange among their clients."-■ '■ '■'■ ••• "" ' But in January of this year the stress generated.in Australia again became too great to be resisted. Then, on 14th Januaryi the London buying rate.'on New Zealand for demand drafts moved up nearly £2 10s, and on the 28th came a nnal move which meant that £300 in London bought £111 2s Cd in New Zealand. A NOTE OF REGRET. ".Personally," wiites Mr. Kcc^e--' I regret this last incieasc, and hold that it might have been avoided, though I admit that there weie reasons of weight in its favour, and that, high as the figure is, it looks moderate -nhen compared with that obtaining in Austiaha. It is high enough to be, I belie-ve, without piccedenf, m the history of New Zealand." Curient rates are quoted as, a futme interesting historical record. ~ ' ' SOARING RATES.

As-' to' :the';vciutlo6l%' Mr: Pieeves states that • there is: a' strong desire to • make_an effort to- prevent fm-ther. increases. ■ lne blOckingrates;betweeiiVAnstraliaarid.New : Zealand have 'been iiiereasedi and are m> the'neiglibourliOod of I&.pet cent., although I -fancy, 1 that unpfficiafly some higher chatges "are: made.' At;'thel moment NewZealand is watching-Au^ttalia'ia^the^ex-pectatidn- that sOmething-,.'ma-y jbe done to prevent theexchange of-thafebuntrysoar-ing5 to quite legendary figures.." "For^the rest, my belief is that most- 6f< the \ New Zealand banks—though not perhaps ■ all-i halve so far-been' able, to avoid' 'rationing.' "It- is'l worth- noting that though four ofithe^six ibaMksiar.e.Australian, ;the:,twp New^Zealandibanks do .about. Co per. cent, of-tlie c6uritry's business/ ' '.' : -'■'■';' •"-. ' THE TRADE BALANCE. , V "JFu'rtbermore, it may be pointed out that on, the calendar year 1930, New Zealand.s favourable trade balance was still about £2 000,000, and that in 1929 it had been more than £7,000,000. ■The■ figures in 1928 had also been'good, 'so .-that the posi; tion'of the trade balance, though, by no means wha,t it ought to be, is by no means desperate, and should improve during^ the year now in progress.' ■ ' '-It has been worse more 'than once durr ing the last ten years than it" is now, and in!i92o was very much worse indeed. In thi,t year the excess of imports over exports, was no less than £15,000,000, and in 1926: it was £4,500,000. In both these cases the position rapidly improved in succeeding years, and an improvement may be lookeii for confidently now."