MONEY INQUIRY

Press, Volume XCII, Issue 27735, 12 August 1955, Page 12

MONEY INQUIRY

MR OTTO NEAR END OF EVIDENCE TRIBUTES BY MEMBERS OF COMMISSION (New Zealand Press Association) WELLINGTON, August 11. Members of the Monetary Commission today paid tributes to Mr W. S. Otto, an Auckland businessman, for the “tremendous” amount of work he had put into his case for monetary reform. Mr Otto’s evidence on behalf of Mr H. J. Kelliher and- the Mirror Publishing Company, is expected to be completed tomorrow morning. By tomorrow he will have spent 11J days in the witness box. His reading of‘his written submissions alone took six and a half days. The rest of the time has been devoted to questioning. “I can’t accept all of it,” said Mr E. D. Wilkinson, a member of the commission, referring to the case. “But the community owes tremendous gratitude to a person who would devote so much time in preparing such a case.” y Asked by Mr Wilkinson what prompted him to put forward / the case, Mr Otto said he believed that there were countries “now feeling their way to new and better methods in the economic field.” Mr Otto said he believed that the banking system had not measured up to its moral and social responsibilities. Ideas of improvement had been developed. A way must be found of solving the inflation problem. Dr. O. C. Mazengarb, Q.C., counsel for Mr Kelliher, commented that Mr Otto’s stay in the witness box was possibly a record length for a witness in any civil or legal proceedings in New Zealand. Mr G. G. G. Watson a member of the commission, asked Sir Wilfrid Sim. Q.C.. counsel for the Associated Banks, whether he would secure from the Associated Banks, well before final addresses to the commission, a concise summary of the trading bank’s objections to the proposals submitted by Mr Otto. “I don’t want a multitude of figures and calculations, said, Mr Watson. “I want a concise summary of their answer.” , . Today’s hearing of the commission ■Was a continuation of the crossexamination of Mr Otto, largely on the effects of operating his proposals for stabilisation, of-export income and import prices. ' , Tomorrow afternoon, submissions are expected to be made, on behalf of the Public Service Association. Submissions on behalf of the Federation of Labour are expected to be presented to the commission in about two weeks. Statement by Banks “Official sterUng area policy is to move as rapidly as reasonably possible toward the restoration of full convertibility," reads a supplementary statemefit by the Associated Banks to the commission. , Progress in that direction need not necessarily take the form' of dramatic plunges, but was more likely to be attempted by a series of administrative changes such as had been made over the last four yeaijp. , x x The term ‘’convertibility” related to the extent to which persons holding sterling could use it to buy goods from any source, make payments in sterling to residents of other countries, or purchase any other currency with it. - There was a distinction between residents of the sterling area and non-resi-dents, who already enjoyed , a considerable degree of convertibility. of their sterling holdings, the statement said. If the immediate goal was convertibility for non-resident sterling, the next step might be to eliminate the distinction between “transferable” sterling and “American account” sterling. That would mean persons in, say, Europe, could freely use their sterling to buy dollars. Little, if any, changes might then appear in the form and restrictiveness of New Zealand’s” exchange and import controls. A “If. however, progress is made toward the convertibility of resident sterling there would be relaxations in the extent to which New Zealand would be free to buy dollar goods or remit money to the dollar area,” the statement said. No notable step toward full convertibility would be attempted by Britain unless there were reasonable expectations that the exchange value of sterling could be maintained so that import prices would not be raised. Sudden achievement of full convertibility would have only a technical effect upon the banking and monetary system of New Zealand, the statement continued. There would be some broadening of the sources of supply of imports, allowing purchases in the cheapest markets. The effects upon New Zealand’s earnings were less certain. Residents of Britain would also have full freedom of choice of supply of food and raw materials. A greater effort would no doubt be needed for the Dominion to maintain her competitive advantage in overseas markets. “The need for sound internal policies and a healthy over-all balance of payments would be enhanced rather than reduced,? the statement concluded.