EXCHANGE RATE

New Zealand Herald, Volume LXIX, Issue 21345, 21 November 1932, Page 10

EXCHANGE RATE

POSITION UNALTERED

NO CABINET DISCUSSION

VIEWS WITHIN COALITION

STRENGTHS OF TWO SIDES

[ny TELEGRAPH —SPECIAL REPORTER]

WELLINGTON. Sunday

No developments in the exchange rate controversy occurred in political circles during the week-end.

Seen after tho customary meeting of the Cabinet yesterday, tho Primo Minister, the Rt. Hon. G. W. Forbes, said the exchange question had not been considered, but it had been decided to defer the introduction of tho Central Reserve Bank Bill until after tho return of the Minister of Finance, the Hon. W. Downie Stewart, who is duo at Wellington from London on Wednesday.

It is expected that urban members of tho Coalition Party who aro opposed to raising the exchango rate will wait on tho Cabinet early noxt week, probably on Tucsda'y.

Both Mr. Forbes and Mr. Coates hold the view that tho exchange question is entirely one for the banks to decide and Bay they will bo satisfied whatever decision is made. Yot tho fact that tho Government contemplates tho establishment of a Central Reserve Bank indicates, as one Minister admitted, that the Government is actually not satisfied with the decision of the trading banks on a matter so vitally important to tho Dominion. Assisting the Farmer When asked what the Government would do if the banks decided against raising the exchange rate, Mr. Forbes said the Government realised tho grave plight of the primary .producers and had already assisted them in a variety of ways. Hopes of an improvement in tho export price position were not being realised, but whether it would be necessary for the Government to take other action if the banks decided against a higher exchange had not yet been considered by the Government.

Although it is commonly asserted that the Coalition Government has a membership predominantly rural, it is not by any means certain that the section agitating for higher exchango could secure a majority in the House in the hypothetical event of a division being forced on the question. It is stated that 26 members have signed a letter, the purpose of which is to indicate to the associated banks the strength of the political movement for raising the exchange rate to 25 per cent. In addition, Cabinet Ministers favourable to an increased rate have to be reckoned, which would give a total of 33 or 34 Coalition members. It is 6tated that Mr. E. F. Healy, Mr. J. A. Macpherson, Mr. P. McSkimming and Mr. A. M. Samuel, while in sympathy with the movement, have not signed the letter to the associated banks. .

Labour Party's Attitude

There aro 50 members in the Coalition Party, and it is believed that at least 10 are opposed to a higher exchange, 60 that at best there are no more than 40 supporters of the movement, including several whose minds are presumably not finally resolved on the question. In those circumstances, the attitude of the Labour Party and the Independents will be watched with some interest. The Leader of the Opposition, Mr. H. E. Holland, has announced that the Labour Party has not yet given consideration to the exchange question. Ho said the Prime Minister's statement to the effect that the banks -must decide the country's' policy on the exchange question emphasised the truth of the Labour Party's contention, that the country was being run by the banks and financial institutions and not by the Government.

AUSTRALIAN MEASURES

FARMERS REQUEST EQUIVALENT

The following telegram has been sent to the Prime Minister, the Rt. Hon. G. W. Forbes, by tho Morrinsville Co-opera-tive Dairy Company, Limited: —"The directors of the Morrinsville Company note the continued fall in prices of primary produce with deep alarm. Wo most strongly urge you to take action to benefit us by the equivalent of the Australian exchange rate and Paterson bounty. Please appreciate the urgency of the matter and protect tho primary producers' interests."

CANADIAN BRITISH TRADERS

ALARM AT PROPOSAL

The proposal to raise the exchange rate is regarded with concern' by the Canadian British Traders' Association of New Zealand, which has despatched tho following telegram to tho Prime Minister, the Rt. Hon. G. W. Forbes: —

" Tho greatest alarm is felt by all merchants and importers at tho suggested arbitrary increase in exchange, as there are great quantities of goods on order in the United Kingdom and Canada which cannot legally or morally bo cancelled. Definitely, many firms would be ruined and employees thrown out of work by the proposed action, which also means absolute defalcation in the obligations incurred at Ottawa."

PROTECTING CITY INTERESTS

HIGH RATE ILLOGICAL

[BY TELEGRArn —PRESS ASSOCIATION]

WELLINGTON, Saturday

In a statement to-day on the exchange rate, the Mayor, Mr. T. C. A. Hislop, said that exchange varied in price with the rise or fall in the volume of New Zealand funds in London. To-day there was a surplus of our funds in London above the amount required for national purposes. Therefore, in accordance with economic principles, the rate should fall, not rise. With the wool export season at hand, the surplus of London funds would increase and not diminish.

A number of members of Parliament wanted to exert political pressure on the banks to obtain a fixed artificial rate of exchange, at least 20 per cent above the rate justified by this trade position. These people, a few "months ago, said tlmt all they wanted was a free exchange and not an artificial rate.

"I was sceptical of their good professions then, and now the mask is off, and their real intentions are revealed," said Mr. Hislop. "An increase to 30 per cent, as advocated by these people, would be disastrous to the city. Additional interests to an amount of £30,780 per annum would have to be found. This would necessitate either a serious increase in rates and charges, or the cutting down of expenditure with wholesale dismissals of men."