Report From The Capital— Fortunes Were Made Over Devaluation Decision

Greymouth Evening Star, 24 September 1949, Page 2

Report From The Capital— Fortunes Were Made Over Devaluation Decision

i (SPECIAL CORRESPONDENT) WELLINGTON, This Day.—Fortunes have been made by a few astute businessmen in New Zealand over the devaluation of sterling announced at the beginning of this week. But for the majority of New Zealanders, the immediate apparent effects will be small — although the implications remain tremendous to the country as a whole.

Unlike the bombshell announcement in August, 1948, that New Zealand’s currency was to revert to parity with sterling—a fact which was known to only five high Government officials —the sterling devaluation had been barked by every dog in the streets of the capital for weeks. A sbries of cablegrams toward the end of last week convinced speculators that the announcement was imminent and they acted accordingly. Never Any Re,al Doubt There has never been any real doubt that sterling would have to be devalued eventually. There was merely a doubt as to when and how much. One thing which staggered observers here was the 30 per cent, devaluation, which was considerably more than most had expected. Estimated ranging from 10 to 20 per cent, had been common.

Similarly, there was never any doubt that New Zealand would not follow Britain the whole way in devaluation. The likely action of Australia was the greatest attraction for speculators. Many thought that Australia would go further than New Zealand—about 10 per cent, further—so ad to partly balance New Zealand’s action in reverting to parity. Speculators bought up leading Australian industrials heavily on the Stock Exchange, but without success as it turned out. Forward Buying

Apart from Stock Exchange operations, there was particularly heavy forward buying of dollars in New Zealand. Some estimate that this ran into millions of pounds, but this could hardly be true, because of the strict watch kept on dollar spending by the Reserve Bank. Merchants throughout New Zealand have been loath "to confirm orders for several months and shelves were becoming bare. Import licences were still being obtained, but they were being frozen until the currency position straightened itself out. Now that the Minister of Finance, Mr Nash, has said that the decision is “final,” these merchants will go ahead and place heavy orders. For the man in the street, sterling devaluation is a little academic. Summed up in terms which the average man can understand, the principal effects seem to be: — Motor-Cars.—The price of cars from Canada will rise by approximately £2OO. As no import licences have been issued for American cars this year they will

not be affected. Tobacco. — No change in price expected immediately, as fairly large stocks of leaf are held, but eventual price increase. Petrol and Oil. — It has been estimated that about 16 per cent. of. New Zealand's petrol requirements come from dollar sources. It looks as if any abolition of the rationing system is further away than ever, with a distinct possibility of a slight price rise. American Magazines.— Higher prices

of about. 50 per cent. Films—New Zealand exhibitors will have to pay higher rentals for Hollywood films. Pressure is bound to be brought to bear for higher admission charges, particularly in the secondary theatres, but doubtful if there will be any increase in cinema charges. General Merchandise. —A general price rise in most commodities is expected when the effects of devaluation are felt. Goods from dollar sources should increase by about 50 per cent., but these are small in number. Other imported

lines are expected to be dearer, particularly those, in which . dollar raw materials are used. Price increases for New Zealand-made

goods with imported raw materials

as base. Prices for Exports.— Higher prices for wool at next season’s sales, with greatly increased American buying. Prevention of black market buying of wool, hides, skins and pelts,* and, consequently, more dollars for New Zealand. Tourist Trade.— A marked influx of American tourists, which should do

much to boost general trade. Farm Machinery.— American tractors and other farm machinery will still come in, but the proposed purchase of 1,500,000 dollars’ worth may be reduced by onethird.

The decision made by the New Zealand Government was not a difficult one, as it had no other choice than to follow Britain. Mr Seddon’s Statue

Seven years after it rolled from its pedestal in the Hall of Memories in Parliament Buildings, the bust of Richard John Seddon has been replaced. The fall on to the hard marble floor damaged the bust. It was repaired temporarily, but when further supplies of Italian marble became available it was sent to New Zealand’s most famous sculptor, Mr R. O. Gross, of Auckland, for repairs.

More J.P.’s To Be Appointed A list containing about 200 names of new Justices of the Peace is almost readv to be announced by the Minister of Justice, Mr Mason.