NEW ZEALAND EXCHANGE JEOPARDISED IN LONDON.

Star (Christchurch), Volume XLIV, Issue 78, 1 April 1931, Page 1

NEW ZEALAND EXCHANGE JEOPARDISED IN LONDON.

Concern Felt In Financial Circles Over Depletion Of Balances There .

(United Press Association. —By Electric Teteeraph.—Copyright.) (Received April 1, 10.45 a.m.) LONDON. March 31. While the Australian Bank is understood to hold sufficient sterling in London to meet Australia’s immediate obligations, concern is steadily growing in consequence of operations outside the exchange pool. Many Australian exporters desirous of obtaining sterling are ignoring the banks and are entering into direct agreements with English merchants.

Financial circles also are most concerned for New 'Zealand exchange. Many Australians are obtaining New Zeuland notes and are changing them for sterling, thereby depleting New Zealand balances in London. 'The authorities express the opinion that if the practice continues New Zealand exchange will go the way of Australian exchange and decline.

A drastic system of export licenses is the only solution of the exchange problem.

SYSTEM MAY CAUSE INCREASE IN THE RATES.

Bankers in Christchurch are aware that large amounts of Australian securities are now being sold in New Zealand, and that the proceeds of these sales are being used to purchase credit in London. All these negotiations are being conducted without the assistance of the banks. If it is continued, said one banker this morning, it would mean a rise in New Zealand-London exchange rates.

As far as a system of export licenses is concerned, it was pointed out that exports consist of sterling, cash, credit and goods. If a system of export licenses were introduced, these would have to be controlled by the Government, and it was pointed out that this would require a huge organisation, for licenses would have to be obtained for exporting everything. They would have to be the sole arbiters as to who would be allowed to export, causing, probably, much confusion. Only by Government control could the transactions of Australia and New Zealand with London be controlled.