THE EXCHANGE RATE

New Zealand Herald, Volume LXXII, Issue 22225, 27 September 1935, Page 13

THE EXCHANGE RATE

A PLEDGE DENIED

PRIME MINISTER'S POSITION REPLY TO MR. STEWART [BY TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Thursday A denial that ho hatl ever pledged himself not to interfere with the rate of exchange' was made in the House of Representatives to-night bv the Prime Minister, Mr. Forbes, who, in the course of his speech in the financial debate, dealt with statements made in a speech at Dunedin on Monday night by the Hon. W. Downie Stewart. Mr. Forbes quoted the statement by Mr. Stewart that the latter " left the Ministry because he differed from it on the exchange question and because the Prime Minister had just previously pledged himself not to interfere with it."

The Prime Minister said it was the first time ho had known that Mr. Stewart had left the Cabinet for that reason. In his letter of resignation Mr. Stewart had made no mention at all of a pledge supposed to have been given in regard to tho exchange. A deputation had waited upon him on November 21, 1932, continued Mr. Forbes, and on that occasion he had said it was not the intention of the Government to interfere with the exchange. At that time Mr. Stewart was 1 out of the Dominion, returning from abroad on November 24. Parliament adjourned on December 1 until January 26, and in the interval a special committee investigated the difficulties of the country. As a result of its investigations it was obvious the Government had either to bring down costs by direct action and further reductions or by advancing the rate of exchange.

After a deal of consideration members of the Government came to the conclusion that an increase in the exchange would be of greater assistance to the people than further xlefiation, said the Prime Minister. It was two months previously that he had said it was not intended to interfere with exchange. Had ho answered in the affirmative when asked by the deputation if it were intended to raise the exchange tho members of the deputation would have been in a position to make thousands with their advance information.

It was just as logical for a deputation to ask if it were intended to interfere with customs duties, Mr. Forbes concluded.

He answered the request of the deputation in the negative, but it was realised later that action was necessary, and that the raising of the exchange was tho best method to adopt.

"A BREACH OF FAITH" DECLARATION RENEWED MR. STEWART'S CONTENTIONS [by telegraph—special reporter] WELLINGTON, Thursday A renewal of his declaration that in raising the exchange when it did the Government had committed a breach of faith with tho business community was made by tho Hon. W. Downie Stewart (Government —Dunedin West) at a later stage in the financial debate in the House of Representatives tonight. "I am surprised that the Prime Minister should have taken objection to my statements," said Mr. Stewart, "because in contradicting me he was contradicting the expressed opinion of every section of the business community which had anything to say about the exchange rate at tnat time. The question was whether the Prime Minister gave an assurance that the exchange would not be altered. He did that and he was deeply committed not to do the very thing he did." Mr. Stewart quoted opinions expressed by various commercial organisations at tho time of the raising of the rate and stated that as a result of the Prime Minister's statement that the Government did not intend to alter the exchange many business firms had made heavy commitments, to their huge loss.

CHEMISTS' CHAIN STORES OPPOSITION TO SYSTEM PETITION FOR LEGISLATION [BY TELEGRAPH—SPECIAL REPORTER] WELLINGTON, Thursday Concern at the possibility of an English firm of chemists opening chain stores in the Dominion is expressed in a petition presented to the House of Representatives to-day by Mr. J. W. Munro (Labour —Dunedin North), on behalf of the Dunedin Retail Chemists Assistants' Union. Attention is drawn by the petitioners to the report that Boots Chemists, Limited, intends to open retail stores in New Zealand, and it is pointed out that this firm has 1100 chain stores in Great Britain and possesses enormous capital. It is submitted that the introduction of these chain stores in New Zealand would be detrimental to the interests of the people of the Dominion, as it would tend to increase unemployment among chemists. There are said to be 600 chemists with 2000 assistants in New Zealand, representing £500,000 or more of capital, although a good many qualified chemists are unemployed and a large proportion of those in business just managed to carry on during the depression years. The petitioners suggest the introduction of effective legislation to protect traders from competition by chain stores and express the opinion that if Boots Chemists, Limited, are allowed to commence operations in New Zealand others will surely follow The petition was referred to the Industries and Commerce Committee.