FINANCE AND COMMERCE.

Press, Volume LXVIII, Issue 20610, 28 July 1932, Page 10

FINANCE AND COMMERCE.

MANAGEMENT OF CURRENCY. VARIOUS PROPOSALS WEIGHED. ADDRESS BY PROFESSOR TOCKER. Tin management of currency was discussed last evening by Professor A. 11. Tockcr in an address before the Currency Committee, at its weekly meeting in the rooms of the Canterbury Automobile Association. Mr L. 11. C. Macfailauc, who after Ins holiday, was welcomed back to the chair by Mr W. Machin. presided over the meeting. Me said the duty of the committee Mas not so much to suggest remedies for the present difficulties, as to get out and bring the public to a realisation that something practical should be done to mend matters. After f|Uoting from Mr J. M. Keynes, Mr Maef'arlane said that only heroic measures could save us—heroic measures supported by an intellectual democracy. Causes of Depression. Commencing his address on currency management. Professor Tockcr dealt with the causes of the present depression, saying that the prime cause, so far as New Zealand was concerned, was the foreign export prices, which liad fallen because of various strains and dislocations following the war. The speaker went on further to examine the causes of the difficulties of. to-day, and said that under such conditions no monetary management could have prevented the depression. "Monetary management means to most people at the present time monetary expansion—to use a harsher word, inflation," continued Professor Toeker. He went on to examine the present financial position, and said the low bank rates of the moment were due to a lack of confidence on the part of the borrowing people in London. Bankers could invent more money—if necessary, create credit—but to do that they must find borrowers. The difficulty in America in the past few months had been the absence of borrowers, and the speaker had read that there was the same difficulty in London. Bankers Defended. All sorts of things had been said about bankers; but the banker was really the ordinary business man. The bank was out to make profits just as any other business did—in the case of the bank, by buying and selling money. The bank wanted to' maintain a position of safety because it must pay its depositors their money, if they wanted it. The banks, thcrefdte, must keep up their reserves. In the case of New Zealand, money had not been convertible into gold for some time; but the New Zealand banks held considerable gold reserves in London. The gold held by the banks in New Zealand was not of much use, except -for "window-dressing." Professor Tocker briefly reviewed banking history in New Zealand, and said the country had a good deal to thank the banks for. The sound position of the banks was a great asset.

Schemes Examined. Various suggestions had been made in New Zealand in regard to currency management. Some people had suggested an issue o£ Treasury notes, to be deelarecl legal tender, and paid out on pabUe works, to the unemployed, and in like- ways. Supposing that £5,000,000 ■worth of Treasury notes were issued, they would be spent and -would go into storekeepers' hands, and {hen into the banks in the form. _ of deposits. The banks would withdraw their own notes from circulation and reissue the Treasury notes, for they paid taxes on their own notes, "but not on the Treasury notes. Probably the whole thing would end with an increase of about £1,600,000 'in the . note issue; but the country uronld have lost the amount of the taxation on the banks' notes. The speaker said he considered that £4,000,000 of. the £5,000,000 issued would go to the banks in the form of deposits. Then there was the scheme of issuing Treasury bills—that was, the Government borrowing from the banks on Treasury bills. At the present time.that sort of thing was going on; but, supposing £5,000,000 was borrowed now, it would become unproductive debt, bearing interest, and being set down against reserves. • "Inflation is only a concealed form of taxation," said Professor Toeker. "Which is the better? If it is-tax-ation we see it; if it is inflation it is concealed." On Treasury bills at the present moment New Zealand was borrowing, as much as she dared borrow; and . it would all have to be paid back at some time, said Professor Tockcr. Going on to discuss an expansion of credit, he said it had been suggested that-the banks should lower tlieir overdraft rates;, but he did not think they were high. It should not be forgotten that the banks were paying heavy taxation, and he thought they charged a fair supply-and-dcmand price on overdrafts. , The Exchange Rate. Another suggestion was a raising of the exchange rate, and that was in many ways the best plan, for what the country wanted most was an increase" in export prices. It would not be wise for New Zealand to adopt a plan of inflation which would increase costs without increasing the farmers' prices. A rise in the exchange rate would simply alter the prices of our exports in London to" different prices in New Zealand money,- and over the whole of the community the loss would be shared. It was plain that the farmer must get his losses back: but there were difficulties in the way. The Government now paid £8.000,000 a year in taxation, aiid it would then have to pay 20 per cent. more, gt tting it f>aek by extra taxation. The banks also would have to pay £l3O for every £IOO in London, and it was very doubtful whether they could use the money in New Zealand at that rate. If they had to come down, say to £llO in New Zealand, they would be. suffering a 20 per cent. loss. "Nobody knows quite what the ex••henge position is at the present time." said Professor Toeker. ''for during the past six months the position lias been artificial. Rut I have an impression that at present .payments from New Zealand were very nearly balanced at £110; and if we ure balancing payments, the country a.s a whole is "paying -its way with overseas countries." The. policy regarding exchange was decided pretty much between the b*nks and the Government, both of which depended on the community, said the speaker. Easing the exchange rate

would.be a drastic change; but it would be preferable to facing a eollapse in New Zealand. Subject Discussed. Mr L. C. Walker said the principle of lower costs was operating in a vicious circle, which in its wider course was bringing civilisation to the point of collapse. Mr Machin, speaking of -what Professor Tocker had termed "concealed taxation," said Government taxation was unproductive, while the other kind of taxation, helping the farmers, would be productive taxation. He put forward a suggestion, that the Dominion's overseas creditors should be asked to reduce their interest rates. Other speakers briefly discussed the question, and Professor Tocker replied to the arguments put forward, being accorded a hearty vote of thanks on the motion of Mr Machin. GLASS MANUFACTURE. A DUSEDIN ENTERPRISE. A company has been formed in Dunedin to undertake glass manufacture. A small company, with a capital of £750, commenced operations last August, and the new concern will take over this company's interests. The plant, which is now in course of assembly and erection, will be capable of placing 15 tons of manufactured glassware on the market per week, and the orders now awaiting fulfilment, together with the prospects which are recorded on the company's books, give promise of a continuous output of bottles, jars, etc. The new company has a nominal capital of £15,000, £4250 of which has been devoted to the purchase of the undertaking of the original Dunedin Glass Manufacturing Company, including plant, machinery, and stock-in-trade.

INTERNATIONAL OIL CONFERENCE. INCREASE IN PRICES LIKELY. (UXITE V i'KESS ASSOCIATION— BT ELECTRIC TELEGBAPH—COPYRIGHT.) (Received July 2Sth, 12.10 a.m.) PARIS, July 27. As an outcome of the International Oil Conference, it is reported that a 25 per cent, increase in oil prices is likely from October Ist, but will be dependent upon Rumania's ratification of the conference agreement. PRAIRIE WHEAT. OPTIMISM' AT WINNIPEG. (UNITED PRXS3 ASSOCIATION—BT ELICTBIO TELEGRAPH —COPIHIGIT.) - WINNIPEG, July 26. The most pronounced swing in grain prices for some time, carrying values up one and seven-eighths to one and three-quarter cents above Monday's close, put traders in an optimistic mood on Tuesday. A more active interest on the part of exporters was an especially reassuring feature. . Some old traders professed to see a promise of better times. July quotations closed at 575, October 60, and December 61J cents a bushel.

PRICE v OF SILVER. (BRITISH OFFICIAL WIBELESS.) RUGBY, July 26. Silver (pence per ounce) is quoted as follows: July 25th. July 26th. d. d. Spot .. 17 17J Forward .. 17 1-16 17 3-16 PRICE OP GOLD. (UXITED PRESS ASSOCIATION—BT ELICTJUtJ TBLSQBAPH—COPIBIQHT ) LONDON, July 26. Gold (per fine ounce) is quoted as follows: & s. d. July 26th .. .. 515 10 July 25th .. .. 5 15" 9 July 23rd .. ..5 15 11 SALE OF PEDIGREE AYRSHIRES. (PEESS ASSOCIATION TELEGRAM. ) INVERCARGILL, July 27. Keen interest was shown by Ayrshire breeders throughout Southland and in northern provinces to-day when a reduction sale of pedigree cattle from the Ivanhoe stud of Mr A. M. Weir and the Allandale stud of Mr R. S. Weir was held at Menzies Ferry, Sixty-four lots were offered, and prices, considering the times, were good/ Particular interest attached to the sale of the first of the stock sired by Mr A. M. Weir's two young imported Canadian bulls. There was keen competition for young bulls by these sires, one bringing the highest price of the sale, 35 guineas. Several others realised 30 guineas.

BUTTER-FAT PAYMENTS TALKS TO DAIRY-FARMERS No. 3. U hen . you hear your Factory's Management pi-aised by its competitors, you can rest assured that it is ineffective and is no obstacle to the opposition. It is the efficient organisation that LEADS and sets the pace which is always subject to abuse and mis-statements. Remember —it is only dead fish which float with the stream ! L -pply the live organisation and obtain 1/- PER LB BUTTER-FAT Until Further Notice PLAY SAFE—SUPPLY TAI TAP r J We pay Railage ' ~ 5 SALE OF FARM. Jcnps, McCrbatio Co., Ltd., report having I sold the property known as Uncle Taylor's f&irn, situate Omihi Valley, comprising 584 ncrcs, with all improvements thereon, to Mr Stanley Stokes, of Waikuku, at a satisfactory price. —6