NEW ZEALAND EXCHANGE

New Zealand Herald, Volume LXXIV, Issue 22675, 12 March 1937, Page 15

NEW ZEALAND EXCHANGE

Sir, —I was interested to read the address of Mr. J. Stanton, City Solicitor, to the Creditmen's Association, wherein he. describes the serious loss on a life insurance policy due to the devaluation of the German mark, but unfortunately the Germans are not the only ones whose life insurance policies have suffered by devaluation. Every life insurance policy in New Zealand that has been maintained with premiums paid in sterling value would now be paid in New Zealand currency artificially devalued by 25 per cent. This is an aspect of our exchange policy , which is not fully realised by the people. The decision of the Privy Council on the other hand would appear to make it necessary for the Auckland City Council and Transport Hoard to pay the whole of their interest commitments on their loans in sterling, whereas previous to the decision of tne Privy Council, they paid something like £950,000 in sterling and the balance in New Zealand currency. This condition of affairs was a foregone conclusion, and I venture to suggest that had the Auckland City Council and Transport Board asked the Privy Council to say whether the Reserve Bank had in law any authority to demand 25 jier cent exchange "on London," the City Council would have had a much better pros* pect of succeeding with the appeal. The question now for the Council is, can this demand upon thom made by the Reserve Bank be maintained in law or sound banking practice, and it is very doubtful if such a demand can be maintained, as there is nothing in the Reserve .Bank Act to justify such a demand. J. Hislop.