THE LONG ECONOMIC ARM.

Auckland Star, Volume L, Issue 181, 1 August 1919, Page 4

THE LONG ECONOMIC ARM.

The rise in the price of petrol reported in this issue is an interesting illustration of what we said last week about the effect of the rate of exchange on prices. For an explanation of the rise there is no need to go further than the fall in the value of the sovereign in New York. In May the lowest value at which the pound was quoted was roughly 4.62 dollars. Last week the value fell as low as 4.26, rallied to 4.34, and closed at 4.32. The difference between 4.62, the lowest rate in May, and 4.32, the closing rate last week, is about 1/3, which roughly corresponds with the rise in the price of petrol in Christchurch. We will be paying more for our petrol in New Zealand because England is not exporting i.enougrC'Jgootls to keep up the rate of exchange, in concrete terms, motoring will cost more in Now Zealand because the British coal miner is not working as hard as he might. It is a pretty example of the economic interdependence of industry. Of course, other American goods will also cost U3 more. We in New Zealand could help to redress the balance by exporting more goods to America, but the volume of Anglo-American trade is so enormous, that any contributions we could make would be relatively very small. As we said last week, the industrial crisis in England has a very practical interest for this, the most remote Dominion. For one thing, there will be more popular interest in foreign exchange and. other dry and hitherto ignored - phases of finance and economics, than ever before. #