INCONSISTENT WITH RECOVERY

Evening Star, Issue 22249, 29 January 1936, Page 2

INCONSISTENT WITH RECOVERY

LOWERING OF EXCHANGE RATE FINANCIAL AUTHORITY’S WARNING [Per U kted Press Association.] CHRISTCHURCH, January 28. An. attempt to lower the rate of exchange in New Zealand would be con-trary-to the experience of all other countries and would be inconsistent with the fundamental policy necessary to promote internal recovery. That opinion, based on experience of Australia, Great Britain, and other countries, was expressed to-day by Professor I). B. Copland, Dean of the Faculty of Commerce at the University of Melbourne, who has been economic adviser to the Governments of New Zealand and Australia. Professor Copland said that internal expansion and an increase in _ imports must, in the absence of an improvement in export prices, impose some strain on the balance of payments. New Zealand was moving towards a position in which it would face this problem, and the greater the recovery in a country the more obvious the phenomenon became. It was this fundamental problem, or reconciling recovery with a level of imports that a country could afford, that made currency stabilisation so difficult. “ There has been some credit expansion in New Zealand, and there will probably be more in the next two years as the country moves towards complete recovery,” he stated. “In these circumstances imports will increase, and New Zealand will have the same experience as Great Britain, Australia, and other , countries that have, by their internal policy, achieved a substantia] measure of recovery. The experience of all these countries is that there is no possibility of appreciating currency—that is, of lowering the rate of exchange. There is nob even a desire to do this.”

Professor Copland said that a deliberate effort on the part of New Zealand to lower the rate of exchange would be contrary to the experience of all other countries and inconsistent with the fundamental policy required to promote internal recovery. It was unfortunate that there had been so much political discussion of the exchange rate in New Zealand. For this the business world could not altogether escape responsibility.