THE EXCHANGE PROBLEM

Evening Post, Volume CVIII, Issue 64, 12 September 1924, Page 6

THE EXCHANGE PROBLEM

Mr. Massey is presently to meet the bankers to discuss with them the difficulties arising out of the exchange problem, iTo those not interested in imports and exports, it may be explained that, it costs £2 for every £100 realised on New Zealand produce sold in Great Britain; it costs a like amount on every £100 worth of business that wool, meat, butter, or cheese buyers-for the Home markets may do in New Zealand. The charge is made by the banks, and it represents the cost of providing for the pay-over of moneys in the Dominion that have, been paid for the purchase of the produce in the markets in which it was sold. Formerly, when gold was in free circulcation it was used to make up any differences between the values of the goods imported by this (or sny other) country and the values of the goods exported. But goldnow'lies in its millions in the vaults of the banks here and abroad, and has practically disappeared—in British countries, at any <i-ate —from circulation. It cannot now be used an an adjusting medium; hence the difficulty. Millions of money paid for produce/and millions more raised by way of loans, are piled up in London on account of : both New Zealand and Australia. The imports of the two countries, -large as they are in the aggregate, are insufficient in themselves to adjust the position created by combined heavy realisations of produce and accumulated loan moneys. Doubtful consolation may be found by the New Zealand exporter in the fact that the Australian '. exporter is paying, or losing, much more on tbe transaction. The position that has arisen maybe described as being due to financial "natural causes.' 1 How Mr. Massey will ikal with it. aiid how the bankers S£j» W'.q .W-.fcusS jyv^Jiyu wjj)

offer to meet it will be awaited considerable interest by "the business community. Exchange is too intricate a subject to deal with in brief space; but it will be manifest to anyone acquainted with the very rudiments of finance and commerce that the solution of the present difficulty does not lie in applying Partingtonian methods.