AT HIGH LEVEL

Auckland Star, Volume LXXIII, Issue 256, 29 October 1942, Page 4

AT HIGH LEVEL

STERLING ASSETS WARTIME DEVELOPMENT New Zealand's sterling funds in London are now at the highest level since well before the war, the latest Reserve Bank return showing the amount as £27,393,210, a rise of £1,040,284 on the previous week's figure. The growth of the Dominion's sterling assets during the war is shown as follows:—

£ October. 1839 5.805.000 19*0 8.821.000 19-tl ■ 14.595.000 1842 . 27.393.210 Probable Source of Strength Askod to comment on the buoyant state of the London funds, Professor H. Belshaw, dean of the faculty of commerce at Auckland University College, said in time of war a reduction in civilian consumption was unavoidable, and the building up of funds was partly a reflection of the diversion of demand to war purposes and partly the result of inability to provide goods in any case Accumulation of funds was, however, likely to be a source of .strength during the period of postwar readjustment provided steps were taken to avoid their depletion or exhaustion through excessive importation when the war ends. One of the most serious difficulties after the last war arose from over-impor-tation to build up depleted stocks.

• accumulation of exchange funds might be an incentive to this, but it was necessary, in the interests of the public as well as the business ! community, to prevent a recurrence of over-importation. "If over-importing is avoided and tne exchange funds remain high they will provide a useful means either of reducing the overseas debt oi of preparing against the recession which may well follow a post-war boom added Professor Belshaw. if these funds were purchased bv the Government and used io make financial payments overseas at a later period when conditions might be depressed, taxation at such a time might be less and in consequence adjustment would be easier."

Reduce Interest Bill . ' Ir J vi ® w of the state of the Lonclon funds there seems to me to be an opportunity to pay off some of our overseas debt and reduce the interest bill," said Dr. E. P Neale secretary of the Auckland Chamber of Commerce, when approached on the subject. New Zealand's debt domiciled in London at present amounts to £152,000,000. ■ Pomting ou t he was expressing his own views and not those of Iti r ' D vT' Neale added that it should also be possible to lower n he .® han « e rate, which was raised in 1933 when prices for our exports v\ere at a low level from 10 per rent to Jo per cent above sterling. There seemed to be a case for lowering the exchange at least to the extent that Ur - exports in recent years had been increased.