ADVANTAGES OF PARITY

Press, Volume LXXXIV, Issue 25580, 23 August 1948, Page 6

ADVANTAGES OF PARITY

VIEWS OF PROFESSOR TOCKER ADJUSTMENT DIFFICULTY “There is a good deal to be said for restoring the exchange rate on sterling to parity,*’ said Professor A. H. Tocker, professor of economics at Canterbury University College, yesterday. “Over a very long period the pound represented the same value and was interchangeable in many parts of the British Empire. It was a real advantage, not only to trade and investment, but also to common understanding and the integration of the British Empire. “If the old par rate was to be restored the time was certainly reasonably opportune, and, whether by accident or design, the change has occurred at the right time of the year, after one export season has ended and before another has begun. There are also disadvantages in the change that has been made, and it seems doubtful whether all these had been foreseen and considered. “When the rate was raised in 1933 the change created serious disturbances in industry.. Then the change was to a higher, rather than a lower, price level. It is always easier to adjust trade and production to higher prices than to lower prices. Now the change and adjustment must be to a lower level, and it is greater in extent—2o per cent, as ( compared with 13 per cent, in 1933. “It is not possible to say what the effect on the national income will be because overseas prices themselves are not stable. But whatever happens in the long run must mean that New Zealand’s national income generally will be in terms of New Zealand money about 20 per cent, lower than it would have been had the rate remained at £125 to £lOO sterling. “While New Zealand’s main trade connexions are with sterling and sterling is at present held at a stable exchange level with other countries, a good deal of doubt is felt whether the sterling rate with the dollar and other countries can be maintained. Britain’s overseas payments are far from balanced, and it is quite possible that, in spite of official efforts and Intentions in Britain, the events may force a devaluation. If this should occur New Zealand might have to consider a further appreciation of her own currency to maintain some semblance of internal stability. “The fact of the matter is that exchanges ’in the world are badly out of joint and are unlikely to resume their former equilibrium and stability until production and trade are restored to higher levels and attain much greater freedom than they enjoy at present. In these conditions it would surely be wise for this country to consider seriously whether it should now link up with the International Monetary Fund established at Bretton Woods and co-operate with the rest of the world in trying to secure and maintain exchange stability,’’ Professor Tocker said in conclusion.

GOODS MADE IN AUSTRALIA

NO TARIFFS TO BE IMPOSED

(P.A.) WELLINGTON, August 21. . No tariffs will be imposed on Aus-tralian-manufactured goods to guard against the possibility of their underselling New Zealand-made goods in. the Dominion.

The Minister of Customs (Mr W. Nash) said to-day that New Zealand would do everything possible to cooperate with Australia because the two countries were very closely linked. The machinery for protecting New Zealand manufacturers lay in the import licensing system and no licences would be issued for goods that could be reasonably. and economically made in New Zealand. Mr Nash added that there was nothing in the change to parity which would affect the Anzac Pact.