PRODUCE & MARKET REPORTS FROM DAY TO DAY

Evening Post, Volume CXIV, Issue 130, 29 November 1932, Page 10

PRODUCE & MARKET REPORTS FROM DAY TO DAY

EXCHANGE AGITATION

EFFECTS ON BUSINESS

ERRATIC QUOTATIONS

"Evening Post," 29th November,

From Inquiries made among heads of local bodies the fact is elicited that the plight of the farmer, in face of low prices and still high costs of production, is fully - understood, and Its gravity is by.no means minimised. But the recrudescence of the exchange agitation is no way to a return °l confidence in business or the utilisation of capital at present barely earning its 'keep in the development of existing indus--tries and the establishment of new ones. . Business has! been totally disorganised by_ the New Zealand on London exchange I agitation, and while it has been in progress in New Zealand it has caused uneasiness overseas on the part of firms in London and in the East having long-estab-lished connections with New Zealand. Locally merchants have "been unable to make their ordinary commitments and. • their usual provision for imported stocks, ■which must be ordered months ahead iio arrive in time for seasonal trades or to re- ; plenish stocks going out, small as the volume of trade may be. This unsettled state of affairs pot only has a restrictive effect on turnover, but also reacts on the labour market, for it is only reasonable to suppose that both merchant and retailer ■will exercise the utmost economy in expenditure on labour, clerical or manual. The building trade is also affected' hy the uncertainty, ' inasmuch as considerable imports require to be made of materials which the local market cannot or does not supply, but which enter very largely into costs of construction.. Naturally, contemplated' new work is not likely to proceed until the landed costs: of materials can be ascertained with reasonable accuracy and specifications framed accordingly. : . Apart altogether from, the exchange question, there is the low value of sterling;in relation to currencies of countries still oa the gold standard, notably the United States. AMERICAN IMPORTS. Business with that country is described by-those having intimate connections with ■ it as now practically at a standstill. The returns of value of imports from the United States for nine months ended Septem- : ber show a substantial decline, but not nearly so much as they will show for the three closing •. months of this year with the pound sterling down to 3.22 dollars. - The nine months' imports from the United States compare as follows:— ; •■■.•■ U.S. imports. . Iftne months. -• > . - . £ . ■ ! 1932 : i.j^^.jMi.ii 2,385,783 1931 2,551,623 1930 ~. ....... "5,905,429 1929 _i ..: ..'7,698,860 :That American export'firms are trying .to keep their New Zealand connections together is evident from efforts they are 'making to quote in face of the dwindling value of the English pound sterling, but '. they sometimes place their New Zealand agents in an awkward position by the . erratic character of their- quotations. For . instance, three wholly different lines were •..quoted to three different Wellington -inf denting houses at what were most;attrac'rtive prjees as compared with quotations made a week or so previously. , . MERCHANTS PERPLEXED. ; The travellers went out with these quotations and did fair business on them. "Then the indentors had the mortification • of learning from the United States exportiets of a.further reduction in their quotaf irons instead of an anticipated advance, and the falls synchronised with the fall of •'- sterling. Explanations to. merchants who lad. already bought on the higher quota..tions and their own explanations to their .retailing! clients were necessarily difficult >in these circumstances. But these illustrations suggest that American export -firms with New Zealand connections are . njuch concerned at the reduction in the volume of business brought about by the combination, of reduced purchasing power in New Zealand and the chute of sterling to record low levels. In their endeavour to' conserve their export trade it is.quite .evident that they feel compelled to reduce • and still further reduce their prices or Withdraw altogether from the market. So. far as exchange New Zealand on London is concerned business firms appear to take the line that, for the time being at ■ any rate, the trouble is over, thanks to the stand taken by the Bank of New Zea,land against a high exchange rate. But ■ there is also prevalent a suspicion that efforts for raising the irate are not yet wholly abandoned. JThis doubt in itself is having a restraining effect on business.