THE CENTRE OF FINANCE

Otago Daily Times, Issue 17941, 21 May 1920, Page 4

THE CENTRE OF FINANCE

SIR JOSEPH WARD'S IDEA. ADVERSE CRITICISM. (Fkom Our Own Uohresi'Ondknt.) WELLINGTON, May 20. ■Sir Joseph Waixl's statement about correcting tiie rate of excliango with America by tho banks deciding not to do all their business through Loudon lias been severely condemned by linancial experts here. lonight's i'ost publishes a lengthy articlo giving some of the opinions elicited. "Simply astounding," stud one business man. "1 always thought Sir Joseph Ward professed himself io be' a .staunch Imperialist. Ills !>uggi\;tion then is the move amazing, lie ougnt to know, too, that the sJi.lting of the settlement point from London to Now York would not all'eot the exchange position one iiit'.e bit. It is well known that the Americans tried all they knew how to get the point of .settlement to New York. _ Now they have radically changed their views in New York by hnding money in London. To change the settling point would make no difference. We, in Now Zealand, are converting hero at 3.80 dollars, and selling at 3.60 dollars. It comes to the same thing. In any case what Sir Joseph proposes could not bo given effect to, lor by a recent United States law, n wo opened banks there wo should have to tako our money with us. The exchange position would not be affected in the slightwit if a big New Zealand bank were opened in America. As it is, we have long liad excellent arrangements with the United States and Canadian banks, and thoy afford the facilities required." This authority pointed out that Now Zealand is benefiting -by the present rate oi exchange in America to the extent of 3v< per cent, of what it sells there, and that it is not the Americans who are. trying to keep up the exchange rate; indeed, they are doing their best to get it down. If we, here pay 30 per cent, more for benzine and the few things we get from America, we make up for that by getting 30 per cent, more for our produce, and i is American trade that js .suffering at the expenso of British trade. Sir Joseph Ward's proposal is generally regarded a; unsound, and even dangerous, as it would lead to a "jumpy" rate that would be detrimental to our interests. A banker points out that the trade ot New Zealand with the United Kingdom is £56,000,000 per year, while that with the United Skates is under £12,000,000. It would thus be a very much more serious matter for the commercial community if the divergences from par and tho frequent fluctuations were in tho New ZealandBritain exchange instead of between New Zealand and the United States.