CONCERN CAUSED

Evening Post, Volume CXXVII, Issue 134, 9 June 1939, Page 12

CONCERN CAUSED

COMMENT ON REPORT

ASSOCIATED CHAMBERS'

VIEWS

The report that the banks cannot provide sterling funds to cover import licences would be received with considerable concern and embarrassment by. importers, not only of finished goods, but also of raw materials for manufacturing purposes in New Zealand, said the secretary of the Associated. Chambers of Commerce of New Zealand, Mr. A. O. Heaney, last night. No one understanding the position would blame the trading banks for their attitude in the position that had arisen. The statement by the Reserve Bank had not sufficient regard to the fact that the trading banks were not in the same position today as in 1931-32, when the exports credit pool was in operation for the purpose of rationing London funds. The position then was that after the requirements of the Government had been met the balance of available sterling funds was there for the purpose of free importation by firms. "Today the ludicrous position arises on the one hand of the Government granting import licences, and on the other of the trading banks, on the instruction of the Reserve Bank, declining to grant the necessary sterling accommodation to cover import licences," said Mr. Heaney. .Whereas in 1931-32 the trading banks had it in their own hands to allocate sterling funds—with which form of regulation the commercial community in New Zealand was entirely in accord—today the Government,- through instructions to the Reserve Bank, impeded the trading banks in handling the situation in the way- they normally would. GOVERNMENT SYSTEM FAILS. It all pointed to the fact that the system of exchange control and import selection followed by the Government had completely broken down —a development that would never have occurred had the Government left the regulation of the allocation of sterling funds to the banks as in the past. He did not mean his remarks to reflect in any way on the Customs Department, which was loaded at short notice with the administration of a most complex and complicated system. The Department, in so far as lay in its power, had discharged its duty with credit in the eyes of the commercial community. The trouble lay in the fact that the Department had been required to administer a system which had become so cumbersome as to prove unworkable when imposed upon the ordinary regulatory proceedings of the trading banks. No one would in turn attach blame to the administration of the Reserve Bank in the instructions which it issued to the trading banks concerning the amount of sterling available for the purpose of importation of goods, whether finished or as materials for local manufacture. "But what sort of system is it that, on the one hand, grants importers authority to bring goods into New Zealand and, on the other hand, denies them the essential sterling to fulfil the contract?" asked Mr. Heaney. "It must be obvious to anyone that the complicated processes which the Government have set in motion have tripped themselves up." INVOLVED METHODS. The commercial community has been called on to conform to a most involved method of State-directed business. It had, whatever its opinions, endeavoured to meet this in all fairness and in a spirit of co-operation in the realisation that the dy:line i New Zealand's sterling funds called for some form of regulation to conserve the Dominion's overseas credits. But it was exactly that difficulty Which the country faced in 1931-32—a difficulty which was met and resolved in a period of a few months before free exchange operations were reverted to. * The experience of those years appeared to point logically to the same necessity being faced up to by the Government today, namely, a determination of the amount of sterling funds necessary to be earmarked for Government, local body, and other purposes, and a statement of the amount of sterling funds remaining and available for the importation of goods, either finished or as raw materials. "On the face of it, it appears that the Government has been unable to so plan the distribution of available sterling funds on this simple basis, and this has led to a point of strangulation in the whole scheme of exchange control and import selection," said Mr. Heaney. "Simplicity appears to be the essential keynote of whatever measures the Government now seems to be called on to adopt to make its scheme a workable one, since thr present method has now, by the under-

stand able action of the trading banks, proved to be wholly unworkable."

Business firms had, over the last six months of the operation of the Government's scheme, been compelled to adjust the delicate machinery of commerce to a straitjacket system of Statedirected conduct of business. But now that sterling funds were being refused for ordinary import purposes, it seemed as if the only way in which business could accommodate itself to the elaborate State plan which had beer imposed on it was to mark time from day to day and whistle for its money till it knew what next step the Government proposed to adopt to the end of replacing commerce on a commonsense and rational basis of operations.