EXCHANGE RATE WITH AMERICA.

Otago Witness, Issue 3414, 20 August 1919, Page 26

EXCHANGE RATE WITH AMERICA.

A SERIOUS PROBLEM. SIR JOSEPH WARD'S VIEWS. (From Our Own Correspondent.) CHRISTCHURCH, August 11. In some remarks mado by Sir J. G. Ward in Auckland he referred to the effect on the dominion of the adverse exchange rate with the United States, and said that the matter must be seriously considered. In speaking to a representative of the Press Sir Joseph Ward amplified the remarks made in Auckland. "Briefly put," 6aid Sir Joseph, "thisia the general position. This country in its trade with America has to carry on itfl system of payments whether on demand, at sight, or at 30 or 60 days through London. Consequently -we have exchange between this country and England, and there is exchange between and the United States. Tho basis that exists at present between England and America is due to tho low value got from America tor the standard pound sterling. This value is so low that it places a disparity not only against New Zealand traders, but also against British traders, and to such an extent that it makes it next door to impossible for an average transaction to leave a profit to anybody who desires to promote trade between New Zealand and America. We have never taken up the stand in this country that we are not to trade with America, nor do I think it would be wise to take that stand, though we give a preference to tho Motherland and are anxious to promote trade -with her and ©very portion of the British Empire. But we do not want to be handicapped in our trade -with America *" by the present high rate of exchange, which in many instances amounts practically to over 3s in the £. Such a handicap means that it is almost impossible for us to carry on trade with tho United States. The cause of. this is largely due to the cessation. of the war and to the stoppage of the centring of a large amount of gold in the United States, which was used for the purpose of balancing trade between America and England. Our drafts lor America are given on England, and consequently they suffer from the same conditions that England suffers from in her commercial relations with the United States. It is one of the altered conditions that the war has brought about." In' explaining the reference to the stoppage on the centring of gold in the United States, Sir Joseph Ward said: "During the war if England purchased from America munitions costing £10,000,000 unless she was sending manufactured goods or raw products of equal, value she had to make up the difference by sending gold to America. Supposing the trade of JNew Zealand from America amounted lo £5,000,000 and the New Zealand trade to America only amounted to £4,000,000, it is quite clear that we should have to provide £1,000,000 before the balance of trad© was effected. The way of doing so is to send gold to America or else to pay the American rate of discount upon American paper. We cannot afford to send gold to that amount, and the Americans with ourselves must find some remedy for the loss involved. It is a most difficult matter to adjust, but it is going to b© .absolutely essential from the point of view of the British trader as well as the traders in British overseas dominions, that a remedy should be found."