SUBSIDY OR EXCHANGE

Evening Post, Volume CXIII, Issue 142, 17 June 1932, Page 8

SUBSIDY OR EXCHANGE

REPORT FROM LONDON

The "Financial Times," London, of yesterday, commenting on the New Zealand exchange rate controversy, states, inter alia:— It is admitted that primary producers need assistance, but banks prefer to give direct rather than by exchange manipulations, and it is undei stood that the banks are prepared to give a "subsidy bonus if the case for an increased exchange rate falls to the ground.

Full confirmation of this statement' is not available in New Zealand, but a "Post" representative, who .interviewed a prominent, tanker, was in-' formed that it is most unlikely that! the report in the "Financial Times" is intended to convey that the banks: would contemplate providing a subsidy I by way of gift. An effective subsidy would involve a very large sum, and tor any institution or group of institutions in Now Zealand to make a straightout gift to such an extent would not be practicable. That the banks or some of them had completed any arrangements to finance a subsidy by co-operation with I tlie Government or otherwise was not confirmed to our representative, though it was not denied that assistance by this means would be both sound and practicable. On being asked whether.'any proposals for a subsidy were under consideration or were likely to be, the banker replied that ho did not feel himself at liberty to make any statement at present. 'Asked whether he considered a subsidy preferable to artificial exchange manipulation, he replied that he considered a subsidy conducted on sound lines much preferable as a general principle in a period of real hardship. Such a subsidy could be properly regulated and controlled and need not be considered as a permanent measure; whereas artificial, exchange inflation, besides having many harmful effects, was liable, once initiated, to become quite uncontrollable.