THE OTAGO DAILY TIMES FRIDAY, JANUARY 15, 1932. THE EXCHANGE POOL.

Otago Daily Times, Issue 21543, 15 January 1932, Page 6

THE OTAGO DAILY TIMES FRIDAY, JANUARY 15, 1932. THE EXCHANGE POOL.

The representatives of the primary producing interests who interviewed the Prime Minister on Wednesday in order to protest against the pooling of exchange credits under the scheme for the licensing of exports made out, from their point of view, a very strong case. They laid emphasis on the unquestionable difficulties with which the producers are confronted. They complained that the farmers in New Zealand were placed at a serionts disadvantage in comparison with - those in other exporting countries through free play not being given in the Dominion to the exchange rates. They implied that it would only be by farmers receiving the full advantage of unrestricted exchanges that a gjreat many

of them would be saved from bankruptcy and ruin. For these reasons, among 1 others, they asked that the exchange embargo should be removed. It was apparently assumed by some of them 'that, if the exchange rate were not <c pegged,” the exporters would benefit by a premium to the extent of about- 30 per cent, on the values of their produce. This may be a mistaken assumption—it is to be gathered that tihe Prime Minister, for one, is highly doubtful on the subject—but it is to be recognised that, if the assumption as sound, the primary producers have a very real interest in asking for a freedom of exchanges. It is a somewhat odd circumstance that, only .a few days prior to the deputation of' the representatives of the f arming interests to the Prime Minister, the Canterbury Chamber of Comlncrce, in behalf of importers, protested to the Government against the departure which it had taken in requiring that export business should be transacted under license. The objection raised by the Canterbury Channber was based on the ground that* a hardship would be inflicted on 'the importers through the State having priority of claim on the exchange pool in London, and a “ de finite assurance ” was sought by it that, if it was necessary for the Governlment to make a first call of £14,000,000 on exchanges, there Would still be “ sufficient funds available in Lcmdon for the reasonable requirements of legitimate trade.” It is, of coiirse, impossible for the Government to give any such assurance. The concern of the Government is to be certain thfl.t it will have credits at its disposal in London that will admit of its meeting the Dominion’s obligations in respect of its overseas indebtedness. In these circumstances it is, in effect, commandeering the exchange upon the sale of New Zealand products in England, and, in doing so, is proceeding oin the principle, to which assent will be pretty generally given, that the interests of the individual must be subordinated to the interests of the nation. Under the course which the has adopted it knows to a shilling the amount for which it has •to make provision in London. Under a fluctuating exchange it might have to provide considerably more than it i at present calculates on having to provide. As the Prime Minister said on Wednesday, if the exchange, being unrestricted, went to 30 per cent, the Government would be involved in an additional cost of £2,400,000 in the transmission of the funds to meet the interest charge. That is a consideration which will have weighed heavily with the Government. Yet the Prime Minister clearly seems to be not wedded to the arrangement for the pooling of the exchange credits. He has agreed to have it discussed at a conference with the banks and the representatives of the primary producers. It is conceivable that the interests of the country might be served better if the exchange rate, instead of being “pegged” at’ 10 per cent., were afforded free play. But it has to be remembered that a high exchange rate has to be paid for by the public in the form of increased prices of imported articles if not, also, in the form of increased taxation.