BANKS' CONDITIONS

Evening Post, Volume CXIII, Issue 11, 14 January 1932, Page 12

BANKS' CONDITIONS

PAYMENTS IN LONDON

INTERESTS OF THE COUNTRY

STATEMENT BY PRIME MINISTER

Replying to a deputation yesterday afternoon representing the New Zealand Meat Producers' Board, the New Zealand Dairy Board, the N^ow Zealand Sheepowners' Federation, the Now Zealand Fruitgrowers' Federation, and the Farmers' Union, the Prime Minister (tho Eight Hon. G. W. Forbes) stated the position that led up to the issue of tho Order in Council providing for the pooling of credits in London and the fixing oi! the exchange rate.

The Prime Minister said he recognised the importance- of the matter brought before the Government. The nositiou in regard to the exeiirngc rate was this: When it was ascertained that it was neeessaiy for the Government to provide the money at this end and not in London, it was essential for the Government to approach the banks and see whether they could provide the necessary exchange to enable that to bo done. The banks met in conference and intimated to the Government that they would be able to provide what was required if the export were put through the banks; otherwise, they would not be ableto give that guarantee; that, they wore not iv a position to say to the Government that they would be! able to find, all that was required, at. the rate oi a million a month, unless the Government was able to give the banks that security. That was the reason why the Order in Council, was agreed tp by the- Government, so as to enable the banks to give the accommodation' to the Government which was absolutely necessary. Then as to the point raised in regard to the exchange. It had been left in' the Order in Council for the banks to fix the rate of exchange, as they had done in the past. .That had always been tho custom with respect to the exchange.' As to the regulation with respect to exporting, that was done so that-the banks would be able to give the accommodation required in regard to exchange. The matter of exchange was, as he had stated, left to be fixed by tho banks. . VIEWS OP BANKS. Tlie question of ' the exchange was raised with the banks, and the opinion expressed to the Government was that it would not be in the interests of the country to let the exchange go to the high rate to -which it had gone in Australia—that the effect of a high rate as a whole would not be to the-advantage of the, country. The rate' fixed by the banks^lO per cent!—was, in. their opinion, the soundest and. best policy in tho interests of the Country. That was the viewpoint of the banks. It had been implied by a member of the deputation that: tho banks had taken the narrow view. Mr. David Jones, a member of the Meat Board, had referred to the wisdom of the- long view being taken. The banks claimed that they took just as long a view as any other section of the community. They said they were interested in the matter, and if it could be shown to their satisfaction that a particular- course was going to be of permanent benefit so far as the primary producers were concerned they would be pleased to give effect to it. They said that in their experience as bankers the adoption of the other course would not do. That was the advice which had been tendered to the Government. The matter of fixing the exchange was left entirely in the hands of the banks. •■■■■:-

• A voice: "And the primary producer has to pay."

■ -Mr. Forbes said the representations o±: the primary producers would receive the careful-consideration of the Government; It was a very big question. No one was able to say definitely whether-1 an increase in the-rate would be of assistance to the country as a whole That it would give an immediate boneit to the primary producer wiuld probably be admitted. If the exchange went up to 30 per cent, the transmission of the £12,000,000 which the Government had to find this year for payments £2,400,000, making a total of £3,600 000 J-he question of finding additional revenue at the present time to enable us to pay our way was one of the greatest difficulties.' - • POSITION OF FAEMEES RECOGNISED. The. Government recognised the position of the farming industry, said Mr. Forbes. They did not need to have any facts or figures placed before them m .regard to that, because they had practical experience in respect to it ±hey knew the parlous position of many of the farmers, and anything1 that could be done to give them, relief would be welcomed by the Government. If it could be made clear that the relief given to them would also benefit the country it would be a good thing, but if the relief meant bringing the public finance down the method, would be very doubtful, because, after all, the farmers, ;likc other sections of the comnvumty would sink or swim with the general finance of the country This w.as a matter that required a great deal of thought, particularly at a time like this. The Government had to be careful that any step taken was sound and safe and in the interests of the country as a whole. As he had said, the matter would have the very serious consideration of the Government. M« I' i? aT ld Jones (a ™ember of the, Meat. Producers Board) suggested that the^primary producers should be represented at any discussion with the banks. ■ Mr. Forbes replied that if that could be arranged, tlie Government would welcome it. At a time like the present the Government welcomed the eo-opera-■lI of °vcrv section of the community. Mr. Forbes added that the Government had agreed to hear representations made on behalf of the Associated Chambers of Commerce. '