Empire Currency

Manawatu Times, Volume LV, Issue 6837, 19 April 1932, Page 7

Empire Currency

- Stabilisation Urgent PROFESSOR COPLAND’S TRENCHANT CRITICISM SYDNEY, April 13. Important comments on the economic position of Australia and New Zealand were made by Professor D. B. Copland, Dean of the” Faculty of Commerce at tho University of Melbourne, on his return from New Zealand by tho Monowai. He laid special emphasis on the need for establishing a new basis for Empire currency, and said that neither the Commonwealth nor the Dominion could afford to wait for the Ottawa Conference. Professor Copland said that tho dol-lar-stcrling exchange rate was one of the most vital, economic influences for the British Empire to-day. It was more important than Empire preference. Australia and New Zealand would get more benefit from the establishment of Empire currency on a new basis than from Empire preference. What he particularly wished to point out was that a steady rise in the sterling rate on the dollar would mean a steady fall in the price of exports from Australia and New Zealand, unless gold prices advanced—and there was little prospect, of that happening. Australia and New Zealand would be vitally interested in securing the stabilisation of sterling at a comparatively low rate. By tho time the Ottawa Conference was hold sterling might have risen too much because of favourable developments in England as compared with America and France. It was imperative that action should bn taken at once, and Australia was entitled to take such action because she had pursued a policy of exchange depreciation rather than price deflation. New Zealand was resisting such a policy. but would no doubt welcome stabilisation of sterling at a low rate when h&r currency and Treasury authorities understood that a rise in the sterling exchange would be harmful to the economic interests of the Dominion.

Referring to the work of the Committee of Economists, of which he was a member in Now Zealand, Professor Copland said that, the committee thought, that tho Dominion was in the same situation as every other primary producing country in the world—she had falling exports values, rising unemployment, serious conditions among farmers, and n growing Budget deficit. The committee, had indicated that New Zealand should adopt a plan similar to that adopted at the Australian Premiers’ Conference in June last. That plan was now in the process of being adopted, but. was hampered to some extent by an acute divergence of opinion between the different sections of the community ns to tho extent of the causes of the depression. Tho differences were mainly between economic interests, as, for example, the controversy between the cities and the country.

Kcw Zealand had adopted a policy of exchange regulation. A pool had been formed to guarantee payments in London. but there "was a difference between the New Zealand pool and the Australian pool, namely, that all exports had to be licensed and the proceeds passed through the banks, which regulated the Tates of exchange. There was no open market and no reliable information as to -what the natural rate of exchange should be. Consequently, tho primary producer felt that his products were being commandeered at a low price in order to sustain other members of the, community. There was an acute disparity between costs and prices in the export industries, which were the very bnekbono of the country. New Zealand farmers had been denied the bene fit of the free exchange rate, which had been of such help to Australia.