HIGHER EXCHANGE

Dominion, Volume 26, Issue 101, 23 January 1933, Page 9

HIGHER EXCHANGE

New Zealand’s Action

COMMENT IN LONDON

Escape by Devaluation

(By Telegraph.—Press Assn.—Copyright.)

(Received Jan. 22, 6.30 p.m.)

London, Jan. 21.

The “Morning Post,” in an editorial on New Zealand’s action in raising the exchange rate, says: “The motives which actuated New Zealand are the same as in the case of South Africa. In the face of the continuing deflation of gold prices it may be doubted whether any country, even the United States, will ultimately resisb the pressure and seek escape by way of devaluation, but if it is carried out in a haphazard instead of an organised manner it is bound to create extreme chaos. Every precedent set in the manipulation of exchanges enhances the danger of world-wide competition in devaluation.” The “Morning Post’s” city editor says that New Zealand’s depreciating her currency has surprised the City, as the exchange of £llO to £lOO has been working smoothly. Some quarters thought that embarrassment might be caused owing to the new heavy depreciation not being justified by the Dominion’s position in regard to the balance of trade.

The “Manchester Guardian,” in a sub-leader, says: “Sir Hugo Hirst, as chairman of the Empire Committee of the Federation of British Industries, takes the opportunity of New Zealand's exchange decision to utter some reminders of the pledges exchanged at Ottawa, for something like competitive depreciation of Empire currencies might be discerned in the present movements. Whatever South Africa’s decision may have done toward speeding up the latest development, the New Zealand Government is acting substantially in accordance with the advice of authoritative local economists, though it is opposed to the advice of the Bank of England’s emissaries in 1931.”

The “Manchester Guardian” warns the Dominions against a “competitive depreciation of currencies. •’New Zealand’s action dislocates the established competing conditions between Australian and New Zealand exporters,” it says, “and Increases the difficulties of those seeking to bring t>he Australian pound to a parity with sterling. It also postpones the establishment of a uniform Empire currency.' The New Zealand and South African decisions will undoubtedly hearten the inflationists in Canada and tihe United States.” AUCKLAND PROTEST “Unwarranted Action” The following resolution was passed at a meeting of Auckland businessmen:— “That this large and influential meeting, fully representative of the commercial and civic interests of Auckland, records its emphatic condemnation of the action of the Government In forcing the policy of the banks in the manipulation of the exchanges. It considers that fixation of exchange rates is essentially not a political question, but a financial and commercial operation that should be conducted by those business concerns, in particular tho banks, possessing the necessary knowledge, experience, and organisation.

“Even at this late hour, it urges further consideration with a view to cancellation of its arbitrary and unwarranted action, which, in the opinion of this meeting, must have a devastating effect on most businesses and taxpayers, must reduce city employment to a serious extent, and increase living costs with a disastrous effect to the unemployed particularly, and have results which at best could be but partially and temporarily off-set by any alleged benefits to the farmers and their mortgagees. “We submit that sufficient importance has not been placed on the opinion of traders, company managers, financiers, and chairmen of local bodies, backed by the opinion of your late Minister of Finance; and, the banks’ sober counsel having been unheeded in the turmoil of political clamour, we are convinced that the action now taken by the .Government is contrary to the will of the bulk of the people, and that its operation should he suspended until the views of the electors are obtained constitutionally.” HIGHER BUTTER PRICES Local Increase l|d. a Pound As a result of the increase in the rates of exchange, local butter prices were advanced by lid. per lb. on Saturday morning. In the case of meat no immediate rise Is expected, in view of the present glutted state of the market. A substantial proportion of grocery lines is imported, and an early increase for these articles appears inevitable. In some quarters on Saturday it was anticipated the price of tea would be increased by at least Id. per lb. from to-morrow. .