PROFESSOR OF ECONOMICS REPLIES TO MR FUSSELL

Press, Volume XCI, Issue 27666, 24 May 1955, Page 14

PROFESSOR OF ECONOMICS REPLIES TO MR FUSSELL

(New Zealand Press Association)

WELLINGTON, May 23. The professor of economics at Auckland University College (Professor C. G. F. Simkin) informed the Royal Commission on Monetary Affairs today that he was disturbed by remarks made by the Governor of the Reserve Bank (Mr E. C. Fussell), as they seemed to “call my professional competence into question.” He was referring to replies made by Mr Fussell when questioned last week by the president of the Federation of Labour (Mr F.. P. Walsh) on the views on the country’s economy expressed by Professor Sipikin in a radio broadcast. Professor Simkirt sent a copy of a letter to the< director of talks of the New Zealarid Broadcasting Service (Mr J. H. Hall) and to the chairman of the committee (Mr Justice Tyndall), and asked that it be made available for publication. “It may, unfortunately, seem from public comments made by the Governor of the Reserve, Bank on my recent economic survey that I was somewhat negligent,” Professor Simkin wrote. This was not the case. Mr Fussell, he said, had challenged his claim that sterling funds were dropping at an alarming rate. Reserve Bank statistics showed a decline of net overseas assets from £137,200,000 at the end of April, 1954, to £97,600,000 this April. “A fall of £40,000,000 a year is enough to worry me,” Professor Simkin said. Mr Fussell, he added, had denied that bank advances were a record in April. However, on April 6, they reached £193,700,000. Mr Fussell had described his claim that the present causes of inflation were local as “myopic,” apparently because inflationary pressures could arise from external as well as internal factors. “They can, but that is irrelevant to the present situation.” Professor Simkin said. “Export prices, import prices, and external receipts have all been nearly constant over the last year or longer.” Just before the commission adjourned today, the chairman (Mr Justice Tyndall) read a letter from Mr Fussell replying to Professor Simkin. Mr Fussell repeated his denial of Professor Simkin’s statement that sterling funds were falling at an alarming rate. On the contrary, said Mr Fus-

sell, they were rising. Since December 1, 1954, the net assets of the banking system had increased by £10,000,000, and now stood at £96,600,000. Net overseas assets had fallen by £40,000,000 a year, but about £25,000,000 of that was attributable to the change in the method of financing dairy produce and meat. “Professor Simkin should be well aware of that reason, which has received publicity," said Mr Fussell. The remaining £ 15,000,000 could be atributed to a somewhat higher rate of imports, as was expected after the relaxation and removal of exchange allocations for imports. Over the las( two years the decrease had been only £6,000,000. | “Our overseas reserves are being safeguarded, and there is no reason for anyone to be alarmed,” said Mr Fussell. Mr Fussell denied that he quoted Professor Simkin as saying an exchange crisis was imminent. He had referred to Professor Simkin’s “comments about what he callefd our sterling funds being threatened.” The word “imminence” had been used later in another connexion. “However, as it could have been taken that I had fastened the word ‘imminence on to his broadcast, I hasten to say that nothing he said implied that the crisis. he referred to was imminent, said Mr Fussell. “He challenges-my correction of mi statement that trading bank advance! again broke their previous record last month, and reiterates his statemem that a record figure of £193.700,00® was reached last month. Reference to the Abstract of Statistics for June. 1952, will prove that the record figure of £195,000,000 was reached on April 9, 1952.” Mr Fussell said that when giving evidence he had been unable to agree fully with Professor Simkin's claim that “present causes of inflation art local.” Mr Fussell concluded: “Although I cannot retract any comments I made in the performance of my duty, ram sincerely sorry if Professor Simkin feels that any such comments callea his professional competence into qu«tion. There is abundant proof m tnt evidence I gave of the high regard in which I hold his standing as an economist.”