EXCHANGE

New Zealand Herald, Volume LXXI, Issue 21910, 20 September 1934, Page 15

EXCHANGE

Sir, —I am surprised that anyone with the nom-de-plume "Banker" should be "bunkered" with such a simple problem. Exchange between nations is not so much goods for goods as value for value based on currency. You have to send £1250 (currency value) for £IOOO (goods value) in London. You have to send £1250 (goods value) for £IOOO (sterling value) in London. To ensure you send £1250 (currency value) you pay cash over counter. To ensure you send £1250 (goods value), a bill of exchange and its twin sister bill of lading are issued. This gives the buyer the legal right to claim value for value £1250 New Zealand goods for £IOOO sterling, i.e., gives them legal rights to £250 of your goods free of charge. There *s certainly no way of evading the exchange, as the documents mentioned are incorporated with the ship's papers and the captain dare not sail without them. I sincerely hope this is the end of the motor versus wool argument, but it is an important point and I had to be insistent. Cambist.

Sir, —It is true, as stated by "Banker," that our exchange rate enables a British buyer, operating in New Zealand, to purchase, with £IOOO sterling, wool valued in New Zealand currency at £1250, hut the difference means that the New Zealand money value has been increased by £250, not that the sterling value has been diminished by that amount 1 as assumed by "Banker." If a change in the value of- our currency in relation to sterling affected the British prices of our produce by the full amount of the change, as is assumed by "Banker," then, since we have in the world a multitude of currencies, almost all of which have different exchange rates with sterling, any one quality of wool, or any other commodity, must have a confusing multitude of different values on the British market, but ''Banker" can produce no tittle of evidence in support of so strange an assumption. The buyer in Britain is concerned with the quality of the wool he buys, not the quality of the currency in use where the wool is produced. "Banker" calls on farmers to "wake up," but if he himself were better awake to the facts of the case he would know that the Danes have devalued their currency in relation to sterling by as much as we have devalued ours, and he would know also that the difference in prices, which he attributes to our exchange rate, existed before our exchange rate was altered. Also, as everyone knows, while our butter, in common with that of other countries, has fallen in price since our exchange rate was raised, our wool has risen in price in far greater degree. Thus, when "Banker wakes up he will find that facts are against him. J. Johnstone,