MOVE TO RAISE EXCHANGE

Hawera Star, Volume LII, 18 November 1932, Page 5

MOVE TO RAISE EXCHANGE

New Zealand-on-Lomlon Rate

PREMIUM OF 25 PER CENT.

Pressure On The Cabinet

URGE BY PRIVATE MEMBERS

STATE ATTITUDE, UNCERTAIN.

Strong pressure for the raising of the exchange rate New Zealand on London to at least 25 per cent, has developed out of the representations made to the Cabinet at Wellington on Wednesday evening by a strong body of private members from both the Reform and United parties. A letter embodying this request was circulated discreetly in the House of Representatives last evening with a view to strengthening the hands of the Government in making representations to the Associated Banks, and this is being signed by numerous Government members.

. The campaign for the _ higher exchange rate had its. genesis as far as the Parliamentary aspect was concerned in an interview on Thursday O£ last week 'between the Prime Minister, the p.t. Hon. G. W. 'Forbes, and six Reform members, the Hon. A. D. McLeod, Mr 11. M. Campbell, Mr K. -S. Williams, Mr T. D. Burnett, Mr J. Hargest and Mr W. P. Enden, reports the ‘'Dominion. ’ ’ They expressed the view that the 'farmers •were facing a desperate situation, and: unless the ‘Government would take some action the country “must inevitably be ruined. ’’ They ’insisted strongly that they would ‘not stand aside while the Government remained inactive.

It is understood that Mr Forbes assured the members he had made every effort to better the position. He said be had conferred with the leading hanking interests in the country, but he added he had been unable to get any further forward. The members then suggested that they should interview the representatives of the Associated Banks, with a. view to pressing their case further. This course was agreed to, ancl some of the members waited upon the General Manager of the Bank of New Zealand. Sir Henry Buckleton, the same afternoon. The cape for the higher exchange rate was again advanced, hut it is stated the representations were not very favourably received. , After a lengthy discussion it. is stated that the members were advised to persuade the Government to borrow £5,000,000 at 5 per cent for the purpose of financing farmers.. mainly in the form of exnort subsidies, but this course was objected to hv the members on the ground that the rate of interest suggested was too high, one member of the. deputation remarking that they could not possibly go to their constituents and ask for permission to add a further. £5,000.000 to the nublio debt, especially at a time like the present. It was claimed this was all the suggestion concerning the loan would amount to because the farmers would have to pnv what they received to the mercantile firms and these firms would in turn have to pai it hack to the hanks, with the result that no one would benefit. RESOLUTION SUGGESTED.

It is reported that the suggestion was then made that the members should) return to the House and endeavour to pass a resolution requesting the Government to take action to have the exchange rate increased to 25 per cent. Even if this resolution were not passed, it was stated, it would, if supported by a large number of members 1 , carry sufficient- weight to achieve the object aimed at. Evidently this suggestion was not adopted, for on returning to the House it was decided to canvass the 'Government members with a view to securing greater support for the move to have the exchange rate increased. This resulted in the deputation which waited on the members of the Ministry on Wednesday, there being 29 present, including Cabinet Ministers.

It is gathered that the Prime Minister admitted that he could not resist such a united request, and lie agreed to make another effort toward improving the condition of the primary producers. The majority of those who waited on the Prime Minister were definitely of the opinion that the exchange rate should he increased, and in support of this belief thev quoted the fact that Australia had benefited considerably throucTi a high exchange rate operating there. EFFECT IN AUSTRALIA.

Reliable information received from the Commonwealth was stated to be to. the effect that the export producers had received immediate benefit when the rate was increased, which had ultimately been reflected upon price levels and had increased spending power. The general benefit of a. high exchange was stated to be fully recognised there now, and the only difference of opinion was as to whether the present rate should be increased or not. These views, which were emphasised by the deputation, were contained in a special cable message received from a private .source in response to an inquiry before the deputation waited on thei Cabinet. As has been common knowledge for several months, members of the Ministry are not completely of one mind upon Jthe exchange question. The strongest advocate in Cabinet for the higher exchange rates has been the Minister of Rubber Works, the Rt. Hon. J. G. Coates, and lie is in sympathy with the present move to. bring about an increase. On the other hand, the Prime Minister, the Rt. Hon. G. -\y Forbes, lias afl along hold the view that the exchange rate question is- one for the banks themselves.

PRIME MINISTER’S ATTITUDE. However, it is believed that My. Forbes may b e inclined to modify bis opinion, particularly in face of the strong representations that the raising the. exchange offers the most effective way of assisting the farmei without imposing too severe a burden on o'thor sections of the community. It is true that Wednesday’s deputation offered two other alternatives-—a further cut in internal- production costs, or the subsidising of oxpoit industries—but it i.s admitted even by those who comprised the deputation that their main purpose was to impress upon the Government the necessitv of raising the- exchange rate as the only real method of meeting the

position. Naturally most of the, farmer members are Reformers and some suggestion has been made that the fate of the Coalition Government may be in jeopardy 'if the .section desiring a higher exchange rate cannot have its way. However, inquiries m the lobbies show that tills view of the. situation is not tenable in. tlie. light of developments which have .so far occurred. Farmer members of the United Party hold views similar to those of their Reform colleagues and it was not without significance that the two spokesmen at Wednesday’s deputation were the Hon. A. D. McLeod, Reform, and Mr. C. H. Cl inhal'd, United. The negotiations to date have "been, entirely friendly and inquiries failecT to substantiate the suggestion that any threat endangering the continuance of the Coalition is involved.

POLICY OF BANKS

DECISION NEXT WEEK

When seen late last night by a “Dominion” representative Sir Henry Bucldeton, general manager of the Rank of New Zealand, expressed considerable interest -in xhe fact that a memorial urging the raising of the exchange rate, signed by certain members of the House of Representatives, was being presented to the Government. Asked what the attitude of the bank of New Zealand was likely to be, Sir Henry Ruckleton said he was not in a position to say. .If the. hank was approached directly by the- Government the question would have to he. considered at a. special meeting of the board of directors. It was probable, of course, that the Government would approach the Associated Banks on the subject, in which case, the question woiikl be discussed bv <the representatives of the banks. In any case, however, the policy of the Bank of New Zealand, which in the past had opposed an artificially high rate of exchange, would be decided by the board of directors, who woiild probably meet early next week. From .inquiries made in other quarters, it was authoritatively learned that the raising of the exchange rate to a higher level was stronglv opposed by the National Bank of New Zealand. the Union Bank of Australia, the Bank of Australasia and the Commercial Bank of Australia. Among the reasons given for opnosing an increase was that anv artificial increase in the rate of exchange was absolutely against the best interests of every section of the community.