EXCHANGE RATES

Greymouth Evening Star, 23 July 1923, Page 7

EXCHANGE RATES

AN EMPIRE PROPOSAL. (Australian and N.Z. Cable Association ) LONDON, July 20. A high financial authority interested in Australian affairs calls attention in the Press to the question of exchange rates within the Empire. He says: It is now an article of faith with British statesmen that Empire trade should be encouraged by every possible legitimate means, but in one direction nothing has been attempted. India has a rupee currency, Canada the dollar, and Australia, New Zealand and South Africa the pound as currency. In the case of foreign countries, the daily fluctuations in the value of exchange are readily available to the man in the street, but in the case of the British dominions they are lumped together. The great difference which the banks create between buying and selling rates, over and above a legitimate charge for interest by the banks in financing transactions, constitutes a levy on trade with the southern dominions.”

The average business man would think that the variation of the dominion exchange rates might be caused by daily, weekly, monthly, or perhaps more particularly by seasonal fluctuations of trade. That was incorrect, except possibly in the broadest sense. Present rates for cable transfers were fixed by circular from the combined Australasian banks, issued in November, 1922. No one would suggest that the balance of imports and exports from Australia and New Zealand to Britain, or vice versa, had remained unvaried since November, 1922.

“It can be stated,” the writer proceeds, “that the charge for exchange is entirely regulated by the banks controlling the trade with Australia and New Zealand. Every single bank engaged in this trade is in the combine. They jointly regulate the exchange charge at what seems good to their eyes. Stated broadly, the bank charge for remittances to foreign countries does not exceed half a crown per cent, both ways, yet the bank combine controlling remittances to and from Australia and New Zealand charges 30s per cent. It stabilises exchange at a price. “This matter does not concern only the merchants and manufacturers and others engaged in Australasian trades. They simply pass on the charge as unavoidable expense. It amounts to millions sterling yearly, and concerns every man and woman in Britain who wear clothes made from Australian or Now Zealand wools, or who eat the products of the dominions. It specially concerns every raisei' of Canterbury lamb, mutton or beef, every producer of New' Zealand and Australian butter and wheat. We all contribute unwillingly to it.” The writer, without posing as an expert, believes that the adoption of Empire currency bills would undoubtedly stabilise the exchange, and tend to maintain it at parity and reduce the banks’ charge to a competitive rate. The present position, he concludes, simply means that there is no freedom in exchange, but excessive charges in normal times and the menace of danger in times of stress.

The writer concludes: “Is the Commonwealth satisfied that the Commonwealth Bank should remain in this combine of Australian banks? What docs Mr. Bruce say? Is the New Zealand Government content that the Bank of New Zealand, in which it is a large shareholder, should remain in a combine levying an ex-

cessive toll? What does Mr. Massey say?”