RATE OF EXCHANGE

New Zealand Herald, Volume LXIX, Issue 21347, 23 November 1932, Page 13

RATE OF EXCHANGE

MATTER FOR BANKS

MR. FORBES AND IMPORTERS

-CENTRAL RESERVE BILL

PROCEEDING WITH MEASURE

[BY TELEGRAPH —SPECIAL REPORTER}

WELLINGTON, Tuesday

A large deputation, representing importing and commercial interests, which protested against any move being made to increase the exchange rate, New Zealand on London, waited on the Prime Minister, the Rt. Hon. G. ,W. Forbes, to-day. The principal speakers on behalf of the deputation were Mr, Edwin Salmond, president of the New Zealand Importers' Federation, and Mr. T. C. A. Hislop, Mayor of Wellington, whose remarks were along the lines of discussions already reported. Apprehension was expressed at the fact that some members of Parliament wero endeavouring to put political pressure on the banks-to increase the exchange

rate Replying, Mr. Forbes reiterated bis previous assertions that the question of exchange was one for the banks and that the Government had no intention of interfering. That being so, he thought the deputation would have been better advised to have taken its case direct to the banks, instead of approaching the Government.

Additional Taxation

If the banks considered it was in the interests of their customers and the community generally to give relief by way of higher exchange, then the Government would havo to put up with additional taxation that would be necessary to enable it to carry its share. Mr. Forbes said he had maintained that attitude right through.

The exchange question had come back on the Government when it had proved necessary to establish the exchange credits pool last January. Farmers had then asserted that they had been prevented from receiving the benefits of a free exchange rate, and strong objections were raised that the Government had interfered to the extent it had.

Mr. Forbes said that at a meeting on the previous day Mr. Hislop was reported to have said that many were puzzled that representations had been made by members of Parliament direct to the Bank of Now Zealand and not to the Associated Banks. However, members who waited on the Cabinet had not asked that the Government should take any direct action, but merely that their views should be forwarded to the Bank of New Zealand. Bank of New Zealand's Part A Voice: Why ?

Mr. Forbes: You had better ask the members of Parliament who waited on the Bank of New Zealand. The only meeting I had with a representative of the Bank of New Zealand was for the purpose of handing him the representations of the members of Parliament.

Continuing, Mr. Forbes said he did not know whether Mr. Hislop intended to create the idea that the Government was ignoring the Associated Banks. However, the Government was surely entitled to consult the manager of its own bank. That would be done in the ordinary course of events, and could certainly not be looked on as a crime.

Mr. Forbes said the suggestion had been made that the Government's Central Bank proposals were being used as a lever in the exchange controversy. Legislation for the establishment of that bank had been in the hands of the law draftsman for some time and the bill would be passed much in the form proposed by Sir Otto Niemeyer. There was a difference of opinion between the banks and the Government on one or two clauses of the bill, and for that reason it was intended to wait until Mr. Stewart returned to New Zealand before going further. Mr. Stewart had been making inquiries in London on the question of central banking and would have all the information required. Wrong Impression Given

" It is the intention of the Government to put the legislation through," declared Mr. Forbes. " One of the speakers at yesterday's meeting of importers in Wellington said the Central Bank was going to be used as a stick to beat the banks. The Central Bank has nothing whatever to do with exchange. Anyone trying to create that impression is not doing a service to the country." Mr. Forbes proceeded to discuss statements that traders and merchants would be ruinod if the exchange rate was increased. Against that point of view, farmers pointed out to him that in Australia there was an exchange rate of 25 per cent, a primage duty of 10 per cent and a sales tax of 5 per cent, and that, in spite of all Ihese imposts, traders there were still carrying on. Every Government in the Commonwealth supported high exchange, and after his return as Premier of New South Wales, Mr. B. S. Stevens, who was an ex-Treasury official, had stated that the exchange should go higher than 25 per cent. As for the argument that an increase in the exchange would be a flagrant breach of the Ottawa agreement, Mr. Forbes said ho had discussed that aspect of the matter with Mr. Coates, who stated that it had been definitely understood at the conference that the financial policy of each country was a matter for itself. The exchange issue did not come within the scope of the Ottawa agreement at all.

" Was a memorial from 26 members of Parliament handed on to the Associated Banks with the Cabinet's blessing?" asked Mr. Salmond.

The Prime Minister replied that if he received any memorial, it was sent along to the proper quarter and would not come before the Cabinet. That had happened in the present case. If the deputation liked to hand him a memorial and ask for it to be sent to the Leader of the Labour Party, that also he would do. (Laughter.)