HIGH EXCHANGE RATE

New Zealand Herald, Volume LXX, Issue 21458, 4 April 1933, Page 11

HIGH EXCHANGE RATE

. CRITICISM 0E POLICY * SURPLUS FUNDS IN LONDON GOVERNMENT'S OBLIGATIONS [by telegraph—press association] WELLINGTON, Monday The president of the New Zealand Importers' Federation, Mr. E. Salinond, in a statement, says each week brings fuller realisation of the failure of the Government's inflationary policy. As the ill-effects become clearer, the defenders of the high exchange find greater difficulty, he states, in endeavouring to allay the natural alarm of the people. Many apologists seek to avoid local evidence, Mr. Salmond says, and refer ad infinitum to the Australian 25 per cent exchange, completely overlooking the • fact that economic and financial conditions in the two countries make comparison impossible. It is a pity, he considers, to see responsible persons trying to make the Australian case fit the altogether different circumstances of the Dominion. "The Importers' Federation does not profess to decide what exchange policy is good or bad for Australia," Mr. Salmond continues, "but emphatically reiterates that the present policy in New Zealand is detrimental to this country. After a little over two months' operation of high exchange, the Government has much food for thought regarding its obligations under the Banks Indemnity Bill, which provides for the purchase by the Bank of New Zealand, as Government agent, of surplus London funds held by the other banks wishing to get rid of tliem. "It is no secret that the Bank of New Zealand already has been presented with substantial purchase demands, and, of course, citizens of the Dominion have to pay £125 for each £IOO of London money they buy. The latest customs returns show a marked monthly decrease in imports, with a consequent slackening of demand for London credits. "It will be interesting to learn just what amount of the overseas funds the .Government, through the bank, is being called on to acquire. The public has an unquestioned right to know, and failure on the part of the Minister of Finance would naturally lead to widespread speculation. Suspicion might easily arise that the authorities are already alarmed at the effect on the national finances of the exchange policy. No clear-thinking person facing the facts can fail to see that the longer the exchange remains up the worse will be the effect on the Dominion as a whole. "Repeated official denials of any intention to review the position merely indicate an absurd stubbornness rather than the genuine desire to do what is best for New Zealand."