THE H.B. TRIBUNE THURSDAY, JUNE 16, 1932 THE OTHER SIDE.

Hawke's Bay Tribune, Volume XXII, Issue 155, 16 June 1932, Page 6

THE H.B. TRIBUNE THURSDAY, JUNE 16, 1932 THE OTHER SIDE.

Our Prime Minister has announced that the compulsory pooling of New Zealand credits in London, arising mainly from the disposal of our export products, will end with this month, and that thenceforward the trading banks will be entirely free to fix London exchange rates without regard to State requirements. He has also explained that this release will have come very much earlier than had been expected when the pooling scheme was established towards the end of last year. At that time it was thought quite possible that, in order to meet the commitments in view, it might have to be continued throughout the current year. However, substantial relief has come from other quarters. In this respect the main items were the five million loan which the Government was enabled to float on the London market a couple of months back and the proceeds of the realisation of reserve securities held in London. It will now be of distinct interest to note what effect, if any, this liberation will have upon the exchange rates that have been in operation during the currency of the pool. Probably, as Mr. Forbes Has also said, no material change is likely to take place, at any rate in the near future.

Hitherto banking exchange rates have been discussed in this country almost entirely with regard to their bearing upon the interests of our own producers for export. A brief message received yesterday, that may have escaped attention by most readers, suggests the view that is held in connection with them on the other side. This message stated that “London banking circles predict failure in the attempt to reduce the value of the New Zealand pound”—that, we take it, means any attempt to raise the rates of exchange as between here and London. In this inferentially welcomed statement we can recognise a consideration for the interests of the British producers for export. The conditions that have arisen here no doubt created a good deal of concern for those manufacturers who have in the past looked to New Zealand as a fairly substantial market for their wares. For them the rapid decline in both the volume and the value of their exports to the Dominion must have meant a serious reduction in the trade that keeps them going. At the best of times, taking the average over the years, the balance of visible trade as between the Old Country and the Dominion has been very notably in favour of ourselves. During the last year or two, with the marked diminuition of our aggregate imports, this discrepancy has been aggravated to a degree that British manufacturers no doubt think beyond all reasonable limits. To realise tins we have only to look at the figures for the three months ending with April last. During that period, while the Old Country look from us some £l3£ millions’ worth of mi: produce, we took from her

more than £4 millions’ worth of her products. With data such as these before us, we can scarcely wonder if British manufacturers are beginning to think that the figures are coming to be altogether lop-sided. This aspect of the case, too, has to be considered in the light of the fact that for some good few years there has also been a fairly steady and more than appreciable trend towards reducing the Motherland’s percentage of our total imports. Yet another aspect of the case has also to be taken into account when we bear in mind that one result of the fall in our imports means that the freight-carriers, which take our produce to London, have to come back to us either wholly m ballast or else with only very light remunerative cargoes. This condition of affairs involves one or other of two alter-natives—-either a submission by the shipping companies to incurring serious losses, or else a substantial raising of carrying charges upon our produce. There are, of course, other factors besides these to bo taken into the reckoning, but what has been said should be quite enough to explain why British manufacturers and traders do not want to see the extra clog of heavier exchange rates added to the disadvantages under yduch they already suffer.