Exchange Control

Hawke's Bay Tribune, Volume XIV, Issue 235, 11 September 1924, Page 5

Exchange Control

Search for System PRODUCERS AT DISADVANTAGE. PREMIER TO INTERVIEW BANKERS. (Per Press Association.) Wellington, Sept. 10. In the House of Representatives this afternoon, Mr W. D. Lysnar (Gisborne) put the following question to the Piiine Minister on the subject of exchange:—Seeing that the official report of the Imperial Economic Conference held in 1923 discloses the fact that it was admitted on all sides, including the committee set up by the conference, that a return to the gold standard would bo a solution to the exchange difficulty, and that the committee aslo recommanded that exchange difficulties cc-uld be ameliorated if the note-issuing authorities were to accumulate sterling assets and undertake to exchange their local currencies for sterling assets and vice versa, and as exchange difficulties have obviously become more aggravated since the date of the conference, can the Prime Minister inform the House whether anything is being done or any pioposal being put forward which is likely to lighten the unfortunate difficulty with regard to the (Question of exchanges. The Prime Minister replied:—The exchange position, instead of improving is becoming increasingly difficult. The disparity is too great. Producers and exporters are at a disadvantage. It has been suggested that the difficulty might be overcome oy means of Imperial short-dated currency bills conjointly guaranteed by Great Britain and the dominions. Such a scheme was very fully investigated by the experts im attendance at the Imperial Economic Conference, also by financial advisers to tho British Government. These experts, however, considered the financial and constitutional difficulties to be overcome were too great, especil ally in regard to what is known as the. “puchasing power parity” in the re-1 spective countries, and the control of credit and currencies admin uttered by each country indepently. The committee considered it was possible to achieve the same or at least similar results by utilising and extending tho existing machinery of banking and credit without having resort to the cieation of a new instrument of Imperial credit, with the various constitutional and financial difficulties to which that might give rise. An investigation led to consideration of an j other method of overcoming tho obstacles of . a balanced exchange with a restricted gol£ movement. Their recommendation, which was endorsed by the Imperial Economic Conference, was that the best means of affording relief i& through the operatione of a central bank with ample power to effect and control exchange operations as between i its own country and the country or 1 countries with which it principally trades. Under this scheme provision I for the closest co-operation of the cenI tral bank and note issuing authorities i would require to be made. I have ' been in constant communichtiun with bankers and other financial experts.regarding the best solution of the worldwide problem, and this week a conference with the principal bankers has i been arranged with the object of eon- ! sidering the application of the recomI mendations of the Imperial Economic CoDfereuce to the exchange system of New Zeafand. The resolution agreed to by the committee at their meeting on November 6th, 1923, was_ as follows: —

”The committee, having considered their terms of reference, have unanimously resolved that whore difficulties have arisen in regard to exchange between l such parts and the United Kingdom. (a) Tho position could be ameliorated if note issuing authorities were to accumulate sterling assets and to undertake to exchange their local currencies for sterling and vice versa. (b) This measure might be further developed and assisted by creation of central banks and by mutual co-ope-ration as recommended by the Genoa Conference. (c) In some cases bank charges for buying and selling sterling appear to be unduly high and should be capable of reduction.” The Hon. J. A. Hanan (Invercarg;ll): Are they suggesting that tho note issue should be increased! Mr Massey: There is no such suggestion here, but it follows naturally as a matter of course. Mr Hanan: It means an expansion of credit. The Prime. Minister: Yes. He added that he had arranged for representatives of the different baitks of Wellington to meet him on Saturday morning. He hoped some good would result, because it was necessary to get rid of -the difficulties of the present, position or to have them ameliorated.