EXCHANGE KATE DEFENDED

Press, Volume LXXII, Issue 21733, 16 March 1936, Page 10

EXCHANGE KATE DEFENDED

FACTOR IN ECONOMIC RECOVERY AUSTRALIAN BANKER ON TRADE CONDITIONS “You may call the raising of the exchange rate inflation; some people call it a more accurate gauging of the relative value of the currency of the country when compared with sterling. The raising of ' the exchange has helped all primary exporting countries to emerge; from the slump; without it Australia could never have weathered the depression.” This is the opinion, of Mr G. H. Bourne, who has just arrived in Christchurch to become manager of the branch of the Bank of New South Wales. Until recently, Mr Bourne, who is a Queenslander, has been manager of the bank’s branch at Tamworth, New South Wales. . . “Australia is showing gratifying signs of recovery, but she has not by any means recovered yet. The biggest factor in this improvement has been the raising of /the exchange rate, coupled with the miers’ plan of gradually balancing their budgets,” said Mr .Bourne. When asked if, in his opinion, it would be beneficial if New Zealand were to place her currency on a par with sterling, Mr Bourne said that he did not consider it practicable for a very long time. After all, by raising the exchange, the Government had only expressed accurately the relationship between the New Zealand pound and the pound sterling; one should not be deceived by the word “pound, which was used to express the currency unit of many countries. He believed that if New Zealand were to restore her currency to a par with sterling, the New Zealand pound would be overvalued, and this'would have a detrimental effect upon our export trade. Australian Competition Already Australia exported more to New Zealand than passed the other way, and if Australia retained her 25 -per cent, exchange rate while New Zealand reduced hers, the balance of trade would be more than ever in favour ofi the Commonwealth. New Zealand primary producers would be penalised and at a disadvantage with those of Australia on the Home market. Australia now Offered serious rivalry to New Zealand on the butter market, for there was little to choose between the quality of the first-grade produce of Denmark, Australia, and New Zealand. The .only ways in which New Zealand surpassed her neighbour _were , m ,the extent' 5 arid quality of her advertising,, and by the fact that Australia could not .maintain the same continuity of supply, because of periodic droughts. At present about 2000 tons of Australian butter were consumed molithly in England, and if the New Zealand exchange were interfered with this amount would probably increase, especially as Australia was improving the quality of her butter by leaps and bounds. Another ill-effect of this action would be to .dislocate trade. In Australia there had inevitably been opposition by 'importers "to* the raising of the exchange, but business bad . xiow adjusted itself to change. If a complete recovery were made it would be possible for exchanges to return to par. but the return would be gradual as the currency gradually became more valuable in relation to sterling. “It cannot be forced,” added Mr Bourne. - 1 Control Of Prices Mr Bourne said he knew too little about the Labour Government’s plans for guaranteed prices to feel competent to criticise them, but he mentioned that Government control of prices had never been a success in Australia. “The previous Labour Government in Queensland attempted to control the price of beef, by buying up the big cattle stations. The result was a great waste of money and the Government was eventually glad to dispose of the stations at a tremendous loss! However, Queensland has had very fair treatment from its present Labour Government, which has acted moderately, and I am sure that New Zealand will have a similar experience. In Queensland there is less unemployment now than in any other state in the Commonwealth,” Mr Bourne continued.

“Both Australia and New Zpaland will have gradually to build up secondary industries; they cannot always be primary producing countries, This has been forced on us by the difficulty of selling our primary produce abroad. We will have to start industries to consume our produce. Immigration would not necessarily increase unemployment if we gfet the right class, though England is naturally loath to part with workers of that type. The class of person to be introduced would require very carefuT thought. The ideal is to have a balance between primary and secondary ' industries within the country. We are all trying to arrive at that balance and it will probably be a long process,” he said. .

On a recent tour of Great Britain Mr Bourne had noted signs of recovery. England had recovered from the depression better than the rest of the. Empire and probably better than the rest of the world, though the international situation was causing concern and was not helping to restore confidence, “E>riland is still staggering under her burden of taxation and the one-time wealthy class has been, if not wiped out, very severely affected.” The housing scheme had absorbed many of the unemployed and distributed a lot of money. In all cities of consequence there Were new suburbs, and everywhere there was tremendous activity to provide better housing for the working class.