EXCHANGE QUESTION

Timaru Herald, Volume CXXXVII, Issue 19627, 23 October 1933, Page 3

EXCHANGE QUESTION

SUPPORT FOR HIGH RATE PROFESSOR COPLAND'S VIEWS VIENNA, October 9. Professor D. B. Copland, of Melbourne, who is representing Australia on the Economic Affairs Committee of the League of Nations Assembly, advocated to-day that Australia should maintain the present high rate of exchange with other countries, and reduce the tariff as far as possible. Any further reduction of the prices of primary produce and increase in costs would destroy investment prospects and delay recovery. Australia’s overseas credit, said the speaker, would not be strengthened by a hasty appreciation of currency, for she was obliged to establish ample exchange reserves in London in preparation for unfavourable seasons. Therefore it was essential to foster export industries. “There is no reason,” Professor Copland said, “why Australia should not prevent, for a short period, a fall in the rate of exchange, and the effects of a fall would be prejudicial to her recovery. Parity with international currency is of secondary importance until world conditions become more settled.” Professor Copland, who will visit the Bank for International Settlements at Basle shortly, and afterwards will confer with economists and bankers at Vienna, said that European economists were deeply interested in Australia’s financial policy. Political and psychological difficulties prevented the general adoption of a similar combination of reduction of internal costs and depreciation of currency. Countries, including the Scandinavian group, which were acting along similar lines to Australia, were recovering steadily. Countries which had remained on a gold basis had beenunable to reduce their costs, and their currency was over-valued. Consequently they had been obliged to Impose prohibitive tariffs to bolster up uneconomic prices.