EXCHANGE RATE COST

Greymouth Evening Star, 28 June 1934, Page 14

EXCHANGE RATE COST

REPLY 'l’o MR COATES. [per press association.] WELLINGTON, June 28. The Importers’ Federation has issued the following: — The Minister of Finance has made another statement in reply to the Federation regarding the cost of the exchange policy. Once more Air Coates avoids the issue. It is admitted he alone is in a position'to give the public definite information regarding the direct cost of the controlled exchange, to date. Evidently, he is determined to refuse it. "While not attempting to excuse his persistent lack of frankness in the matter, the Minister suggests instead that the Importers’ Federation is endeavouring to fool the public, and he asks how the figure of £5,023,000 being the estimated cost of taking ovei- the surplus London funds of £20,094,000, has been arrived at. Will the Minister state definitely whether it is not. a fact the Government has already p<id trading banks for these surplus funds by treasury bills, such treasury bills being the amount of London surplus plus 25 per cent, exchange. If the premium -was not 25 per cent., what, was it? The Chairman of the Bank of Now Zealand in a recent address stated the true exchange rate should now be about par. If that is correct, there seems to be no visible chance of the Government avoiding heavy loss. It is understood that surplus funds have been taken over at an extra cost of 25 per cent, and they have been paid for by the people of New Zealand. Is it not true that the loss incurred has been debited to the Minister’s famous suspense account? Mr Coates argues the important thing about exchange rate is that it should be stable, but this Federation is satisfied that the most important thing in the best interests of all sections of the community is that our currency should be linked with sterling and that exchange with sterling should be controlled by the law of supply and demand. Anything else is financial juggling, the consequences of which must inevitably be faced. Resolutely refusing to keep to the point of giving the actual- cost of artificial exchange policy, the Minister has twice endeavoured to draw a red herring across the path by twitting the Federation for not giving him a definition of the word “inflation.” This body is unwilling to be sidetracked into a. discussion on an economic theory. It is dealing with facts. The statement was that there would be danger of inflation, if the Government retires Treasury Bills at present held by the trading banks, by reserve bank notes, or cheque on the central reserve bank balances. That statement stands.