EXCHANGE IN THE ACCOUNTS

Evening Post, Volume CXV, Issue 139, 15 June 1933, Page 10

EXCHANGE IN THE ACCOUNTS

We are grateful to the Minister of Finance* for correcting the error in our analysis of the Public Accounts which arose through misreading the Minister's own statement. Mr. Coates, in making this correction, states: "The additional cost to the Budget arising out of the rise in the rate of exchange.was £470,000 only." This £470,000 was the actual cost' of exchange purchased under the Banks Indemnity Act. The position is not yet clear. In Mr. Forbes's Budget and in Mr. Coates's statement made on January 21, the cost of 10 per cent, exchange for & complete year was set down at £350,000. The Public Accounts show "Exchange on remittances, £812,450 (net)." If this figure includes the £470,000 paid under the Banks Indemnity Act either there was no additional .charge"incurred tin 4he high exchange months (February, and March) on account of the Government's own remittances to London, or. some part of- f the £1,910,000 surplus credits Was applied in payment of Government interest. To clarify the position the Minister of Finance may be asked to show (1) whether, as he stated to the Importers' Federation six weeks ago, funds taken over from the banks "have not so far exceeded the, amount needed to meet the Government's ordinary interest requirements ,in London"; (2) whether any remittances on account of interest were made to London, after high exchange came into operation; (3) as funds taken over from the banks are met by Treasury bills, whether bills equal to the part of these funds (if any) used in payment of interest have been redeemed from revenue. The Government no doubt wishes the whole question to be- dropped and the. Prime Minister is reported today as staling on arrival in London there was no immediate prospect of the alteration in the New Zealand exchange except f jin accordance with the decisions of the Conference. This statement is jmade, however, before Mr. Forbes has been able to hear English opinion on this question and the closely-allied question of lightening the burden of New Zealand interest payments in London. We have added to. this burden of our own volition by raising the cost of remitting the interest and English-bondholders may point this out when we ask for relief. They may point out also, when they hear the official Farmers'. Union claim that high exchange acts as a "protective tariff" to secondary industries "pampered at the expense of consumers" that there is a simple and direct way of Correcting this.