EMPIRE FINANCE

Otago Witness, Issue 3619, 24 July 1923, Page 20

EMPIRE FINANCE

BANK COMBINE ATTACKED. LONDON, July 20. A financial authority who is interested in Australian affairs calls attention to the question of exchange rates within the Empire. He says it is now an article of faith with British statesmen that Empire trade should be encouraged by every possible legitimate means; but in one direction nothing has been attempted. India has the rupee currency, Canada the dollar, and Australia, New Zealand, and South Africa the pound. In the case of foreign countries the daily fluctuations in the value of the exchange are readily available to the mail in the street ; but in the case of the British dominions they are lumped together. The great difference which the banks create between buying and selling rates over and above the legitimate charge for interest by banks in financing transactions constitutes a levy on trade with the southern dominions. The average business man would think that the variation of the dominion exchange rates might be caused bv daily, weekly, monthly, or perhaps more particularly by seasonal fluctuations of trade. This is * incorrect except pos sibly in the broadest sense. The present rates for cable transfers were fixed by circular from the combined Australian banks, and issued in November, 1922. No one would suggest that the balance of imports and exports from Australia and New Zealand to England or vice versa has remained without variation since November, 1922. It can be stated that the charge for exchange is entirely regulated by the banks controlling trade with Australia and New Zealand. Every single bank engaged in this trade is in the combine. They jointly regulate the exchange charge at what seems good to the eyes. It is stated broadly that the bank charge for remittancesto foreign countries does not exceed 2s 6d per cent, both ways; yet the bank combine which controls the remittances to and from Australia and New Zealand charges 30s per cent. It stabilises the exchange at a price. This matter does not concern only merchants, manufacturers, and others engaged in die Australian and New Zealand trades. They simply pass on th; charge as an unavoidable expense. It amounts to £1,000,000 yearly, and concents every man and woman in England who wear clothes made from Australian and New r Zealand wools, or who eat the products of the dominions. It specially concerns every raisei’. of Canterbury lamb and mutton and beef, and every producer of New Zealand and Australian butter and

wheat. We all contribute unwillingly to it. The writer, without posing as an expert, believes that the adoption of Empire currency bills would undoubtedly stabilise the exchange and reduce the bank charge to a competitive rate. The present position simply means that there is no freedom in exchange, and excessive charges in normal times and a menace of danger in times of stress. The writer concludes: “Is the commonwealth satisfied that the Commonwealth Bank should remain in this combine of Australasian banks'.' What does Mr Bruce say? Is the New Zealand Government content that the Bank of New Zealand, in which it is a large shareholder, should remain in a combine which is levying an excessive toll? What does Mr Massey sav ?’ ’