EXCHANGE CREDITS

Otago Daily Times, Issue 21545, 18 January 1932, Page 7

EXCHANGE CREDITS

THE COMPULSORY POOL PRIME MINISTER REPLIES TO CRITICISM., (Per United Press Association;) WELLINGTON, January 16. Replying to the Canterbury Chamber of Commerce in the matter of the exchange credit pool the Prime Minister (.Mr G. W. Forbes) says he recognises that the action taken is an extraordinary one, and far-reaching in its effects, but the Government is satisfied that some such step was absolutely necessary in the national interests. There is no question of the- Government using its powers to cover up the financial difficulties of local bodies. From the point of view of the financial reputation of the Dominion the credit of the local bodies is second only to tliat of the State. The borrowing of local authorities is now supervised by the Local. Government Loans Board. The exchange pool will in no way enable any local authority to increase the burden on its ratepayers, as suggested. The pool is merely to enable the banks to resem e sufficient exchange to enable the local authorities to meet their existing London commitments for interest, etc., as they fall due for payment. In regard to the £4,000,000 Treasury bills these were issued purely to avoid purchasing exchange for the time being, and not for the purpose of avoiding expenditure, as stated in the letter. In regard to the amount of London exchange likely to be available for importers, it is recognised that this will depend on the amount received from the sale of our exports abroad, and the matter is largely bound up in the future course of the world’s prices for primary products. The imports for 1931 lagged considerably behind the exports, and it is not anticipated that for this year there will be any acute shortage of London exchange for legitimate trading needs.