PROBLEMS AT OTTAWA

New Zealand Herald, Volume LXIX, Issue 21251, 3 August 1932, Page 11

PROBLEMS AT OTTAWA

CURRENCY AND EMPIRE EARLY REPORT EXPECTED. CONSIDERATION OF POSITION By Telegraph—Press Association—Copyright OTTAWA, Aug. 1 The report of the sub-committee of the Currency Committee of the Empire Conference probably will be ready for tho. conference at the end of the week. The sub-committee is to meet to-morrdw. No official indication is given as to the probable solution of the monetary problem, but there is a general feeling that the policy of the British Government and tho Bank of England during the past three months is absolutely right, everybody in conference circles cordially agreeing with it. For several months after leaving the gold standard apparently neither tho British Government nor the Bank of England had a definite future policy. Thus interest rates remained at 5 to 6 per cent, which meant dear money. During the past three months tho Bank of England, with the obvious concurrence of the Government, has been pursuing a policy of reducing the discount rate, which is now the lowest in history and which means cheap money. Two More Important Factors A second factor in the situation which is also regarded with the utmost approbation in conference circles is Britain's conversion of her £2,000,000.000 war loan from 5 per cent to 3i per cent. A low bank rate means a cheap interest rate for short-term securities, and the lower war loan brings a cheaper rate for first-class lon'g-term securities. A third factor is the establishment of the £150,000,000 exchange equalisation fund announced in the British Budget, which .represents the Government's definite determination to prevent speculation from interfering with the exchange position. There is a tremendous amount of international short-term money which under other conditions would have been directed to long-term investment avenues. This involves the movement of vast volumes of international money from one country to another, causing violent exchange fluctuations and upsetting equilibrium by heavy flooding or equally heavy withdrawal. Fluctuations in Exchange Britain suffered twice in the past year by reverse processes. Whereas the withdrawal of a large amount of short-term money from Britain was a big factor in forcing her oil the gold standard, she has been equally embarrassed during the past few months by the flow of a great volume of international short-term money. The last fluctuations in exchange have been caused more by the movement of this short-term money than by actual balances of trade between countries. Whether or no the stabilisation fund of £150,000,000 is sufficient is not yet demonstrated, nevertheless it is expected to be a big factor in checking instability of sterling exchange in relation to the gold dollar. The question is being discussed in conference circles whether Britain will indicate with sufficient definiteness that this recent policy will be steadfastly pursued whatever happens, also whether Britain can do anything more. ACTIVITIES REVIEWED MR. CHAMBERLAIN'S HOPE A SUCCESSFUL OUTCOME OTTAWA, Aug. 1 Mr. Neville Chamberlain, British Chancellor of the Exchequer, reviewing the proceedings of the conference to date, said he cherished the highest hopes for a successful outcome. Canada had not yet disclosed fully the concessions she was willing to grant Britain. Canada's wheat policy was still undecided, but he believed Mr. Bennett would adhere to the request for preference, seeing that this, apart from preference on pork and bacon, which would stimulate the pig industry, represented all that the Prime Minister could offer Western farmers. Australia awaited Canada's wheat decision with some interest because whatever Canada might ask Australia would give it solid backing, inasmuch as the Commonwealth was not making wheat one of its main planks. British and Dominion Government officials to-day continued their examination of the hutter, meat and fruit proposals. SOUTH AFRICA'S CASE WRONG INTERPRETATION NO HOSTILITY INTENDED OTTAWA, Aug. 1 Some of I lie newspapers wrongly describe the statement of South Africa's case, made yesterday by Mr. N. C. Havenga, as "the first note of discord" sounded at the conference, because lie referred to the trade position in relation to gold—referred to in Mr. Baldwin's document—as "clearly fallacious." Tho South Africans do not intend that their arguments shall bts construed as containing the slightest hint of hostility. They merely desire that I lie Union's trade position shall be seen in truer perspective. MR. S. M. BRUCE LINCOLN'S INN BENCHER OTTAWA. Auk. 1 Lord Blanesburgh lias telegraphed to Mr. S. M. Bruce, leader of the Australian delegation, saying that he (Mr. Bruce) has been elected an honorary bencher of Lincoln's Inn.