Higher Exchange Rate

Manawatu Times, Volume LV, Issue 7009, 19 November 1932, Page 7

Higher Exchange Rate

Will Government Yield to Farmers’ Demand?

Commercial Interests Strongly Opposed

A report earlier in the week that the exchange rate was likely to be substantially raised was dismissed in banking circles as “a stupid canard’’ and by the Prime Minister with the remark that “there is absolutely nothing in it.” Despite these denials it now transpires that very strong pressure is being brought to bear on the Government in this connection and that a certain amount of progress has been mado. Tho campaign originated last week when six Reform members, Messrs McLeod, Campbell, Williams, Burnett, Hargcst and Endean, waited on the Prime Minister, Mr lorbcs, and expressed the view that the farmers were facing a desperate situation and unless the Government would take some action tho country must inevitably bo ruined. They made it plain that they would not stand by while tho Government remained inactive.

an additional tariff, and contrary to the spirit of the Ottawa agreements.

It is understood that Mr Forbes assured tho members ho had made every effort to hotter tho position. Ho said ho had conferred with the leading banking interests of tho country, but he added ho had been unablo to get any further forward. Tho members then suggested that they should interview the representatives of tho Associated Banks and they met the General Manager of the Bank of Now ZealaiM, Sir Henry Bucklcton, tho same afternoon. Tho caso for the higher exchange rato was again advanced, but it is stated the representatives wore not very favourably received. Members were advised to persuade the Government to borrow £5,000,000 at 5 per cent, for tho purpose of financing farmers, mainly by export subsidies. Tho members considered, however, that all this would amount to would be that the farmers would liave to pay what they received to tho mercantile firms and. these in turn would pay the banks, with tho rscult that no one would benefit.

Tho next move was a canvass of Government members to seo what support a higher exchange rate would receive. This rcsultod in a deputation of 29 members waiting on the Ministry on Wednesday. It is gathered that tho Primo Minister admitted that lie could not resist such a united request, and he agreed to mako another effort towards improving the condition of tho primary producers.' The majority of those who waited on tho Prime Minister wore definitely of the opinion that .lie exchange rato should be increased, and in support of this belief they quoted tho fact that Australia had benefited considerably through a high exchange rate operating there, the deputation having a cable from a private source in Australia to that effect. It is well known that the Cabinet is divided on tho subject and that the Prime Minister has held that exchange is a matter for tho banks, while Mr Coates is in sympathy with tho view that a higher rata would be beneficial. Those who are working to this end hope that Mr Forbes will modify his opinion and accept a higher exchange rato as (he most effective method of helping tho farmers. Tffo raising of the exchange is strongly opposed by tho National Bank of New Zealand, the Union Bank of Australia, the Bank of Australasia, and the Commercial Bank of Australia. The Bank of New Zealand has also opposed any artificial increase in the exchange. Sir Henry Buckleton said last night that if the Bank was approached directly by tho Government the question would have to bo discussed by a special meeting of directors to be held next week.

For and Against A COUNT OF THE HEADS It is believed that, with the members of the Opposition included, there arc 32 members of tho House who are opposed to a high exchange. The Government members who are said to be definitely opposed to any alteration are Messrs. B. A. Wright (Wellington Suburbs), W. A. Voitch (Wanganui), IT. Holland (Christchurch North), A. J. Stallworthy (Eden) and A. Harris (Waitcmata). Tho Independents who arc believed to be opposed to any change are Mr. H. Atmore (Nelson) and Captain 11. M. Eusliworth (Bay of Islands).

A “Bound Kokin’’ VIEWS OF MEMBERS It is stated that the banks ~ arc anxious to obtain the views of members of Parliament in reference to the exchange rate, and something in the nature of a ‘‘round robin” was in circulation in the lobbies yesterday. A number of members havo signed this, but there are others who, while giving verbal support to tho proposal, are not inclined to commit their views to writing. This may result in the 'document being signed by only a portion of tho members who arc in favour of a pegged exchange.

Contrary to Ottawa CHAMBER OF COMMERCE MESSAGE Per Press Association. AUCKLAND, Last Night. The Auckland Chamber of Commerce lias telegraphed tho Prime Minister strongly urging non-intcrfcrcnco by the Government in the cxchango situation. The arbitrary fixing of a high rate, it declares, would probably force the Government to levy an export tax as the only moans of balancing the Budget. Furthermore, it would be equivalent to