“TRADE WILL REMAIN DISLOCATED”

Dominion, Volume 27, Issue 252, 21 July 1934, Page 14

“TRADE WILL REMAIN DISLOCATED”

Maintenance of Exchange Rate IMPORTERS’ VIEW OF BANK STATEMENT “The statement just issued by the Reserve Bank announcing that the existing rate of 25 per cent, would stand for a prolonged period is, of course, dictated by the Government Indeed. Mr. Coates has never made ar.y \ secret of the fact that control of the currency was a matter for the Govern ment. That may be quite correct, but so long as the Government dictates that an artificial exchange rate should operate, so long will importers remain uneasy and trade be dislocated.” This statement was made by the president of the New Zealand Im porters’ Federation, Mr. Edwin Salmond, yesterday when invited by “The Dominion” to comment on the decision of the Reserve Bank of New Zealand published on Thursday. “There is no doubt,” Mr. Salmond continued, “that the Government cherishes the fond hope that, as a result of the Reserve Bank’s statement, funds now held In New Zealand by United Kingdom manufacturers will be immediately remitted, and that the tide of importations will immediately swell to such proportions that these two factors, In combination, will not only absorb present London surplus funds, but also prevent funds piling up there again in the near future. “Doomed to Disappointment.” "Importers fear that such hopes are doomed to disappointment. It may be that portions of the moneys held here by English companies and firms will gradually return to the United Kingdom, but one has only to glance at the figures published this morning, giving the details of our exports and imports for the twelve months ending June 30 last, to see that, even if all moneys due for importations had been remitted to England, there would still be very large London balances on which a loss of 25 per cent, would have to be shouldered by the Government. “So far as future importations are concerned, the members of the Importers’ Federation are emphatic that they cannot increase their purchases to any material extent so long as the artificial rate of 25. per cent, remains in existence. It may be taken for granted, therefore, that funds will con tinue to pile up in London, and the time must come when the force of circumstances will take control and compel a reduction in the rate. “The reductions in the tariff which have just taken place will not alter the position. The 25 per cent, exchange rate is a super-tariff operating against imports, although, judging by the remarks of the president of the Farmers’ Union on tariff matters, this particular point seems to have escaped bis notice. “One other feature must be noted, and this affects the general public,'’ said Mr. Salmond. “Since the exchange rate was artificially raised, many British manufacturers have simply carried the burden of the 25 per cent, rate hoping, that it would soon be reduced. In the face of the Reserve Bank’s Statement, no doubt these concerns will now decide that it will be necessary i for the market to absorb this charge. This means that the landed cost of a great many articles in every day. use will be increased. The importer, in turn, will be forced to increase his prices to his- customers, who will, of course, duly pass this on to the public, which will now be called upon to bear the full burden of this subsidy to the farmers.”