EXCHANGE RATE

New Zealand Herald, Volume LXIX, Issue 21349, 25 November 1932, Page 13

EXCHANGE RATE

DIRECTORS OF BANK

IMPORTANT MEETING TO-DAY

NO ALTERATION LIKELY

POLITICAL CONSEQUENCES

[BV TELEGRAPH— SPECIAL REPORTER]

WELLINGTON, Thursday

The outcome of the important meeting of the directorate of the Bank of New Zealand to-morrow to discuss the exchange rate question is causing keen speculation in political circles. It is stated that the views of the directors on the merits of the proposal to raise the rate are somewhat divergent, but there is a slight preponderance of opinion among observers that an alteration in tho rate is not altogether likely. Should no alteration be made, and no alternative plan for helping the farmer suggested, tho question will then become entirely political and increasingly difficult to control without causing serious embarrassment lo the Government. The bank's fateful decision to-morrow, therefore, is being awaited with anxious interest in political circles.

LONDON AUTHORITIES

RAISED RATE OPPOSED VIEW IN FINANCIAL CIRCLES [UV TELEGRAPH —PRESS ASSOCIATION] WELLINGTON, Thursday Disagreement with the proposal artificially to raise the rate of exchange was expressed by Sir Harold Beauchamp, who returned to Wellington by the Haugitane to-day. Sir Harold said that during his stay in London as member of the local board of the Bank of New Zealand, he was constantly in touch with eminent financial authorities. These men earnestly desired to bring about an expansion in trade between Britain and New Zealand and were hopeful that expansion would come as a result of Ibe Ottawa Conference, but they viewed with apprehension any attempt to raise the rate of exchange unduly, as this would/ seriously affect the export trade to the Dominion.

Sir Harold said also it would offset in a large measure the advantages gained by way of preferences arranged at the Ottawa Conference. "I understand, however, that this is a burning question in New Zealand at present," he said, "and the outcome of the move to raise the exchange will remain to be seen. I have my own opinion on the subject, but I do not know the minds of my fellow-direc-tors."

"Before I left London," he said, "financial authorities there knew of the strong attempt by the general manager of the Bank of New South Wales to raise the New Zealand exchange to parity with the Australian rate, and at that time I expressed the opinion that this question would be revived in New Zealand by those interested on account of the pastoralists. Higher exchange would really amount to a class tax on the community outside the farmers, and it is a question whether farmers would benefit to the extent that is expected if the exchange rate were raised to 25 per cent. Once the exchange rate is raised, it is difficult to ge't it down.

"From that point of view, I am inclined to favour the establishment of a bounty, which is easier to remove when no longer necessary. The point is that in the past the rate of exchange invariably lias been based on New Zealand's trade balance. It should continue to be so based, especially in view of the favourable balance we have in London at present. Farmers have been treated in a very liberal manner by their mortgagees, who have not the slightest idea of putting them off their lands. Therefore it would be unfair to penalise the rest of the community to give further assistance to farmers, with whom, however, every sympathy is due owinp; to the low prices ruling for their produce. I would regard a bounty as being the lesser of two evils."

PARLIAMENTARY VIEWS

OBJECTION TO ALTERATION CASE FOR 20 MEMBERS [BY TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Thursday A memorial expressing objections to any suggestion of political interference with the exchange rate was presented to the Prime Minister. Mr. Forbes, and the Minister of Finance, Mr. Stewart, to-day on behalf of 20 members of Parliament. A copy of the memorial was also sent to the chairman of the Associated Banus.

Actually, nine members signed the memorial, namely, Messrs. A. Harris, R. A. Wright, A. J. Stalhvorthy, W. A. Veitch, H. Holland, W. A. Bodkin (Coalitionists), C. A. Wilkinson, H. Atmore (Independents) and H. M. Rushworth (Country Party). Other members who did not sign expressed general support of the statement, while several members, who were expected to have signed, are still absent from Wellington.

Mr. Bodkin amplified the reasons set np in the memorial to incorporate some special views of lus own on the subject.