TEST OF EXCHANGE POOL

Hawera Star, Volume LI, 6 April 1932, Page 5

TEST OF EXCHANGE POOL

STRATFORD MEMBER’S REQUEST

QUESTION IN PARLIAMENT

(By Telegrapn—Press Association.)

WELLINGTON, April 5. Mr. W. J. Poison (Coalition, Stratford), in the House of Representatives to-day, asked whether, in view of the fact that he had been informed that three of the leading counsel in New Zealand had declared the Order-in-Council establishing the exchange pool was illegal ..and ultra vires, the Government would withdraw it, and further, whether the Government would give permission for a Supreme Court decision to be made to test the matter and to enable primary producers to obtain their rights. The Prime Minister (the R,t. Hon. G. W. Forbes) replied that the question involved some investigation and he proposed to go into it.

VIEW OF BANKERS’ JOURNAL.

THE DOMINION’S CREDIT

An interesting commentary on the Dominion exchange pool is given in the “Bankers’ Magazine” for February.

“One phase of the world crisis,” it states, “is the almost universal restriction which in one form or another has been placed upon the foreign exchanges. Since our departure from the gold standard countries which have been intimately linked with sterling have found greater difficulty in meeting their overseas commitments, and consequently no surprise was occasioned when it was learned that New Zealand had entered the ranks of those centres which had found it necessary to control their exchanges in an effort to combat the effects of the depression. The plan of the New Zealand Government, which became effective as from the beginning of the current year, takes the form of an exchange pool, and presumably has been modelled somewhat on the lines of that which has been in operation in Australia for some time past. Exports of foreign currency may now be made only under license, and all exchange credits ai’ising from the sale of exports abroad have, by agreement among the banks, been brought into a pool, the resources thus mobilised being at the command of the Government.

“The present state of the London capital market, particularly where overseas loans are concerned, makes it imperative that the Neyv Zealand Government be in a position to meet its commitments from New Zealand funds. The pooling arrangements show that , this has been fully appreciated, and, although there are obvious objections to any form of exchange control under normal conditions, these objections in existing circumstances should be overruled if the scheme permits of New Zealand meeting its overseas liabilities, while the fulfilment of the commitments at the due dates should tend to raise still further the level of New Zealand credit.”