EXCHANGE POOL.

Press, Volume LXVIII, Issue 20612, 30 July 1932, Page 16

EXCHANGE POOL.

DIVIDED OPINIONS. COMMENT IN LONDON. (fbom our own correspondent.) LONDON, June 24. ■For somo time past, says the "Statist" of June 18th, the New Zealand authorities have been toying with the idea of bringing about a further depreciation in the exchange rate of the currency. Their aim has been to provide the additional stimulus to export trade of wliich the country appears to bo in need. Considerable pressure has been brought to bear upon the Government with this end in view by various exporting interests. A commission ol economists was appointed earlier in the year -to consider the problem of tho exchange pool, and of the l'atc at which credit passing through this pool was converted. At tho same time an independent opinion was asked for from .the. English economist, Professor Gregory. Processor Gregory's view was that it would ,be unwise, to follow a high exchange rate policy—i.e., consciously to depress the exchange value of the currency before time had been allowed to establish more clearly the trend of sterling prices—ami during the course of his recommendations he made the important point tliat it was highly questionable whether, in tho absence of central banking machinery, tho New Zealand banks were in a position to keep prices steady while allowing the rate of exchange to look after itself. These wise' counsels have not prevailed, and at the end of this month the Order-in-Council establishing the exchange pool is to be revoked. The rate el' exchange will be left completely free, and it is expected that an immediate depreciation will occur. Opinions on this problem are so divided, even in banking quarters, that it is unlikely that tho ring of banks, which "normally regulate the New Zealand exchange, will be able to maintain the tradition of unanimity to which we had become accustomed even before the days of the pool. Appeal to Chambers of Commerce. The "Financial Times" returns to the subject this week, their special contributor writing: The situation in regard to tho New Zealand exchange is sjill complicated, while fears as to what might happen after revocation of the pool regulations at the end of, the month have not been alleviated. Thero is no indication of any change of attitude on the part of tho Bank of New South Wales, which has intimated that, in order to raise the rate, it intends to break away from the "ring" of banks which normally regulate the exchange. It is, indeed, regarded in the bestinformed London circles that, when the pool regulations are; withdrawn, tho bank in question will take independent action, and that,'as a result, tho other banks will be compelled to follow suit and. raise the rate, despito tho fact that market conditions do not justify such a step. Hopes that the New Zealand Government might interfere to prevent any unwarranted and totally artificial rise in the exchange rate have been dashed to the ground by the statements of Mr Forbes, the Dominion Premier..

British Trade Affected. . An iucreilae in the exchange rate between New Zealand and Great Britain would be a serious matter for British manufacturers and their export trade to tho Dominion. Of New Zealand's export trade, moro than 80 per cent, ia with the Mother Country, while nearly 60 -per cent, of her imports dome from Great Britain. If the Bank of New South Wales succeeds in its efforts to depreciate the exchange, exports to New Zealand from this country would he seriously reduced. This would mean a reduction in the demand for London funds, leaving the present huge credits of the Bank of New South Wales available for sale to Australia at a profit of anything up to 25 per cent.—that is, if the New Zenland rate is brought up to the level of the Australian exchange. Such an increase could not fail to be disastrous to British manufacturers. Chambers of Commerce in this country should take every step to oppose strenuously this unwarranted and unjustified attempt to further reduce British exports to New Zoaland. By so doing, they would help* to maintain the spirit necessary to achieve success at the com ins Ottawa Conference.

WHISKY PROFITS. •%: v ■ ' DISTILLERS' DIVIDEND LOWER. The final dividend of the Distillers Company for the year ended May loth is 10 per cent., a. small reduction com : pared with the previous year's final payment, which was 12£ per cent. As the interim distribution was unchanged at 7$ per cent., the dividend for the whole year is 17$ per cent.; this is the first departure from a 20 per cent, dividend basis since the capital was enlarged in 1925, when the company secured control of Buclianan-Dewar. . At the general meeting last July the chairman observed that in maintaining the dividend lie would not have shareholders believe that the company had been unaffected by the depression. Since then tliere had been little lifting of the depression, while the difficulties of overseas business have increased, says "The Times." No surprise was therefore caused by the decision to lower the dividend and by the indications that profits for "the past year were on a somewhat smaller scale. The allocation to reserve is again £250,000, but no announcement is made of a transfer to dividend equalisation reserve, to which £250,Q00 was appropriated a year ago. The "carry-forward" is increased from £283,152 to £291,482.

JOHNSONVILLE STOCK SALE. At the Jolinsonville sale ; (he slieep yarding was one of the best for Bome considerable time. Prime bullocks and cOws met with a keen demand at last week's rates. Wethers were slightly firmer , as , compared with last week, whilst ewes, taking into account the quality, showed no alteration in prices. Lambs and hoggets were dull of sale. Prime bullocks sold to £8 7s 6d, heavy to £7 Bs, prime cows and, heifers to £4 17s, vcalers to £1 15s, prime wetliers to 15s, prime ewes to lis lid, hoggets to 12s 7d, lambs to 14s. BUTTER-FAT PAYMENTS TALKS TO DAIRY-FARMERS. ■' ' NO. 4. Mr Dairy-farmer! Make your own decision. Remember, each season you are told tha:t the next one will be different; this"'has been so for years past! The acceptance of these statements lias cost you real money. What other produce do you sell in the lowest market?, SUPPLY TAI TAPU AND OBTAIN Is PER LB BUTTER-FAT FOR AUGUST AND UNTIL OTHERWISE ANNOUNCED. PLAY SAFE—SUPPLY TAI TAI'(J We pay railage.