Greymouth Evening Star. AND BRUNNERTON ADVOCATE. MONDAY, JULY 3rd., 1933. EXCHANGE BLUNDER.

Greymouth Evening Star, 3 July 1933, Page 4

Greymouth Evening Star. AND BRUNNERTON ADVOCATE. MONDAY, JULY 3rd., 1933. EXCHANGE BLUNDER.

surprise need be felt that a dispute has arisen in London, over a payment of New Zealand interest due. in Dominion currency, worth 15/- in the £1 only-, and that early steps were taken by the Stock Exchange authorities to mark their resentment at such action. Mr. Forbes hastened to disclaim any Government liability for the Auckland Transport Board’s decision, but seeing that the Government was responsible for pegging the exchange rate, the Prime Minister and his colleagues cannot escape blame. This undue interference with the Dominion’s exchange rate was not warranted by the trade .balance returns, the normal deciding factor, and was taken against the advice of the Dominion’s bankers, and the then Finance Minister, who resigned rather than be a party to such tactics. Moreover, nearly all the newspapers in this country opposed the high rate, and outside the farming community, for whose benefit the Cabinet acted, scarcely a good word came for the Ministerial policy. Apart from the injustice to many New Zealanders themselves, it was argued thatMhe deflation of New Zealand’s currency was a breach of the spirit of the Ottawa agreement. This'view was also urged by manufacturers in Britain, questions being put oil the subject in the House of Commons, and angry protests being published in leading London newspapers. The 2a per cent difference in the value of Britain’s and Now Zealand currencies is regarded by British exporters as bad as an extra 25 per cent, tariff duty, and, in fact, imports from Britain have fallen since the exchange rate was arbitrarily fixed. It does not yet appear that the farmers have gained Irom the new rate, anything like the benefit- that was promised them, and it is ceitain that millions will have to be paid by the New Zealand taxpayers _in addition to their own individual extra costs, —to the banks 10 offset the latter’s losses. The whole story is one of the most disastrous administrative blunders in the Dominion’s history, and an early return to saner methods is essential.

There is nothing in the matter of which New Zealanders may feel proud, and the good name this country has enjoyed in the Mother-

land, is seriously 7 endangered. When responsible‘London journals talk of “impudent default,” or “unfavourable impression,” and when the value of all New Zealand securities drop on the Stock Exchange, it is time for the country to sit up and take notice. Little blame can be laid against thc-Auek-land Transport Board, which claims to be carrying out its legal duty. The issue may have easily been forced by any other Dominion local body, owing money to Britain. Sympathy will be felt with those New Zealand Councils and Boards which have had additional burden thrust on them by the Government’s high exchange policy. Nor can the British investors be blamed for refusing to be victimised. They lent their money at the rate of 20/- to the £l, and should not now be expected to accept 15/only, unless New Zealand is to

plead general inability to meet her financial, obligations. What the elfeel of the latest development will be on the loan conversion proposals Mr. Forbes is supposed to he negotiating in London, is difficult to predict, but it will not make, the way any easier for those who seek concessions. A flavour of suspicion, or mistrust, may be attached to New Zealand loans for a long time, on Ihe once bitten-, twice shy principle, higher interest rates having to be paid, to attract the lenders. 'Mr. Downie Stewart resigned because. of the. fixing of the exchange rate. His successor may now consider. following that example, sec-i ing that Mr. Coates is believed to be primarily responsible for the policy, which up to a short time before its authorisation, even the Prime Minister strongly opposed.