THE HIGH EXCHANGE

Otago Daily Times, Issue 21920, 4 April 1933, Page 6

THE HIGH EXCHANGE

MANUFACTURERS* CRITICISM PURCHASE OF LONDON FUNDS DIFFICULTIES OF THE BANKS (Per; United Press Association.) WELLINGTON, April 3. Mr J. L. Salmond, president of the New Zealand Importers’ Federation, in a statement, says that each week brings fuller . realisation of the failure of the Government’s inflationary policy, and as the ill-effects of this erroneous policy become clearer, the defenders of the high exchange find greater difficulty in endeavouring to allay the natural alarm of the people. “Many apologists,” he says, “seek to avoid local evidence and refer ad infinitum to the Australian 25 per cent, exchange, completely overlooking the fact that the economic and financial conditions in the two countries make a comparison impossible. It is a pity to see responsible persons trying to make the Australian case fit the altogether different circumstances of the Dominion,. “ The Importers’ Federation does not profess to decide an exchange policy, good or bad, for Australia, but emphatically reiterates that the present policy in New Zealand is detrimental to this country. After a little over two months’ operation of high exchange the Government has much food for thought regarding its obligations under the Banks Indemnity Bill, which provides for the purchase by the Bank of New Zealand, as the Government’s agent, of the surplus London funds held by other banks wishing to get rid of them. It is no secret that the Bank of New Zealand has already been presented with substantial purchase demands, and, of course, the citizens of the Dominion have to pay £125 for each £IOO of London money they buy. The figures published on Friday sliow a marked monthly decrease in imports, with a consequent slackening demand for London credits. “ It would be interesting to learn just what amount of overseas funds the Government, through the bank, is being called on to acquire. The public has the unquestioned right to know, and failure on the part of the Minister of Finance would naturally lead to widespread speculation. Suspicion might easily arise that the authorities arc already alarmed at the effect on the national finances of the exchange policy. No clear-think-ing person, facing the facts, can fail to see that the longer the exchange remains up, the worse will be the effect on the Dominion as a whole. Repeated official denials of any intention to review the position merely indicate absurd stubbornness, rather than a genuine desire to do what is best for New Zealand.”