ECONOMIC OUTLOOK

New Zealand Herald, Volume LXXIV, Issue 22700, 12 April 1937, Page 5

ECONOMIC OUTLOOK

DANGER OF INFLATION REARMAMENT PROGRAMME TEST FOR CAPITALIST SYSTEM Tho domestic boom is still well established, and, with tho incidence of rearmament demand spread over the next few' years, a continuation of active ami profitable conditions in industry should bo ensured. This conclusion is contained in a half-yearly banking and 'commercial review issued by tho Statist. The main concern should not be connected with the question of upholding tho activity and profitability of economic enterprise, but with tho prevention of excessive activity and profit inflation. With a defence programme, of £1,500,000,000 to bo spread over the next five years and to bo covered as to about £100,000,000 by borrowing, it is evident that serious dangers of over-expansion will bo met. The next five years will, in fact, provide a firstclass test for our authorities and, indeed, for the capitalist system of industrial organisation, as it is known in England. The wholly abnormal and artificial stimulation of industrial activity that will be compressed into this period must carry with it the-risk of a subsequent reaction. Tho plans and policy that should be devised to avoid, or at least mitigate, that reaction should ,aini in tli'o first place at preventing any undue inflationary developments following the imposition of the defence programme over and above tho boom conditions that aro already apparent in the economic situation. That probably will not be done by a real tightening of credit conditions, because this instrument is too unselective in its operation. Qualitative control of credit is required, and the machinery for it, which is now virtually nonexistent, should immediately be established.

Tl«? banks should devise means for the better collection and diffusion of information on the volume and distribution of their advances, and should evolve the machinery and the willingness for co-operative action in restricting accommodation for speculative or undesirable objectives. The Government, too, should immediately reconstruct its public works policy in the light of the defence programme. This should ho done with the objective, of retaining an adequate margin' of desirable capital works in hand to be launched when the activity under the defence programme" shows signs of slackening. BRITISH TOBACCO PREFERENCE DIVIDEND The .director of British Tobacco Company (Australia), Limited, have declared the usual quarterly dividend on preference shares at the rate of 6} per cent per annum for the quarter ended April 30. It will be payable on that date. FOREIGN EXCHANGES DECLINE OF THE FRANC (Keceivcd April 11, 5.5 p.m.) British Wireless RUGBY, April 10 The following rates on foreign exchanges were current yesterday, compared with the cabled quotations on April 8 and par:

•Sellers. {Nominal. (Received April 11, 0.5 p.m.) LONDON, April 10 On the foreign exchange market today the following quotations ruled: — New York, 4.89$ dollars; Paris, HO'/ie francs; Batavia, 8.91 guilders. NEW ZEALAND QUOTATIONS The Associated Banks (other than the Bank of New South Wales) quoted the following dollar rates on Saturday, on a New Zealand currency basis, subject td alteration without notice: — Selling: United States Canada On demand . . 3.03% 3.02% T.T 3.012% S.U'J'A Buying: On demand .. 3.07% 3.00% Following are the latest rates for purchases and sales of foreign exchange quoted by the Bank of New South Wales, Auckland. They are subject to alteration without notice:—

CUSTOMS EXCHANGE RATES Rates of exchange ruling at tho announced dates of departure of vessels named are shown in tho following table. They are subject to confirmation by the Customs Department.when the exact time of departure is learned. Finally declared rates are marked*:— Ardcnvolir, America, dollars .. .. Ardeavohr, Canada, dollars .. .. -1-H8 Goslar. America, dollars .. .. 4.80 VALUE OF TIMBER TRADE Tho value of the Dominion's imports and exports of timber during February are reported to be as follows by the State Forestry Department:—imports: From Australia, £16.111; Japan, £1615; Canada. £1.433; Finland, £1979; others, £lsfl. Exports: To Australia, £82:23; Pacific Islands, £1002; United Kingdom, £32.

Apl. (J Apl. 8 Par Montreal, dol. .. •1 .MJ/s •J .88% 4.8(>0 New York, dol. '1 .Si) 4.8 O 1 /, 4.80 Paris, fr. 30 !.)V 3 105% « lO.j.OO Brussels, belga.. ao.ooy, 2o.ouy, 35.00 Geneva, fr. •21 .52% 21.52V, 25.22 Amsterdam, gr. 8.05 8.04% Milan, lire 93'/,, 0*2.00 Berlin, r.m. ]•_».! ft TJ.17 •jo.4 a Stockholm, kr. 1!).:»!'/a mao 1 /. 18.150 Copenhagen, kr. Oslo, kr. 22.40 22.10 18.150 lit.! It) i o.ooy. 18.151) Vienna, sch. 20 1 /# «i»Vi 34.585 Prague, kr. i-wy. i-ioy la 104.25 Helsingfors, mark ■jua'A 220% 3 03.23 Madrid, pes. .. 5 of 55t 25.221 Lisbon, escu. .. 110%, 310%. 5-17 y, 110 Athens, dr. r.tTVa 375.00 Bucharest, lei... (ifiT'/a 070 813.0 Rio de Janeiro, m. 'IVid* <l'/d* fi.SOUd Montevideo, dol. 3»y 0 d* 3!>%d* Bid Bombay, rupee. . .18'/nd 38%d lSd Shanghai, dol... 14%d 14 l % 3 d — Hongkong, dol. 1 l 16 /i 6 d .— Yokohama, jen 1 Id 14d 24.5Sd Batavia, gr. 8.00 Va S.UO'/a 12.10 Belgrade, din. . . '213 211 270.3 L Warsaw, zloty . . 25.81 20.81 43.38

To £1 N.ii. T.T. On Demand Currency Selling Buying Selling U.S.A., dol. . 3.0255 3.0730 H.0305 Canada, dol. . 3.0224 3.U00U 3.01*74 Austria, sch. . 20.03 — '.'0.05 Belgium, belga. 23.210 — 23.251 Czocho'vakia, cr. 111.85 — 11 1.00 Denmark, kr. 17.894 18.204 17.004 France, fr. .. 87.20 — 87.33 Germany, r.m. 0.7 L5 — 0.720 Holland. 0. .. 7,1*13 — 7.1 17 Italy. liro 7-l.flS — 74.00 Java, n. 7.101 — , 7.105 Norway, Icr. . . 15.802 10.2 i 12 15.002 Sweden, kr. . . 15.1111 15.816 3 5.501 Switzerland, fr. 17.'-J I'l 17/J 10 Noumea, fr. .. 85,1)2 — 85.1)8 Papeete, fr. 80.07 — 80.13 N.Z. pence to — 18 25-32 Hongkong, dol. 18 51-04 18 17-04 India, rupee : 22 21-32 2211-32 22 41-01 Ceylon, rupee 22 21-32 22 11-32 22 41-04 Japan, yen .. 17 31-04 — 17 15-32 Shanghai, dol. 18% 17 27-32 18 23-04 Singapore, dol. 35 13-04 34% 35 3-10 Chefoo. ilol. . 18 31-04 17 13-10 18 15-32 The cost in Now Zealand currency of the pound sterling, and of the principal overseas units, on the latest Quotations, is as follows: — Par R (1 20 0.00 Present Price u <1 London, pound .. 24 10.05 Australia, pound .. 11)10.81 20 0.00 Fiji, pound . . . 22 5.0(5 20 0.00 New York, dollar 5 1.04 4 1.31 Montreal, dollar 5 0.01 4 1.31 Paris, franc 0 2.72 0 2.28 Berlin, relchsmark .. 2 O.oO 0 11.74 Copenhagen, krone .. 1 '1.33 1 1.22 2 0.58 Yokohama, yen 1 o.ll