The Christchurch Star PUBLISHED BY New Zealand Newspapers Ltd. THURSDAY, DECEMBER 7, 1933. THE EXCHANGE TANGLE.

Star (Christchurch), Volume LXIV, Issue 938, 7 December 1933, Page 10

The Christchurch Star PUBLISHED BY New Zealand Newspapers Ltd. THURSDAY, DECEMBER 7, 1933. THE EXCHANGE TANGLE.

will be able to read X the strictures of the AuditorGeneral on the cost of high exchange without realising how fully the worst predictions regarding the operation of this unsound economic expedient have been fulfilled. In the six months ended on September 30 the amount paid to the banks on surplus exchange was £3,286,206, but the Auditor-General points out that there has been a loss to the Government of about 4 per cent on exchange transactions that have totalled some £19,000,000 since the beginning of the year. It is apparent, indeed, that the cat is only' gradually coming out of the bag in regard to the penalty that the country is paying under this policy'. For instance, the Auditor-General finds it unsatisfactory, from an audit point of view, that in the case of London transactions relating to the services of the public account, the exchange in many cases has not been allocated to the particular account or service in respect to which it was incurred, and that in cases where there has been no actual remittance no allowance has been made for exchange, but receipts and payments have been entered in the New Zealand accounts at their sterling amount without conversion into New Zealand currency'. This, by' the way', is merely a sidelight on the exchange imbroglio, and emphasises the inequitable nature of the Government’s attempts to dragoon the Southland Power Board into a course of action which was unfair to Southland ratepayers. Evidently the Government itself has not put its house in order, and is conducting its affairs in a manner that would not be condoned in a business firm. The basic objection to high exchange, indeed, is that by creating confusion it kills confidence. VALUES AND INSURANCE. IT IS QUITE a common thing nowaday's to see a property' offered for sale, say' at about £SOO, on which there is a Government valuation of more than £7OO, and insurance on buildings for a similar amount. Such advertisements point two morals. The first is that Government valuations are scandalously high, and the second is that fire insurance companies are not very' particular whether their customers over-insure or not. For the first of these evils the remedy must be gradual, but there is a short cut to the second. Mr Savage, the Leader of the Opposition, say's that if he were in pow'er he would take it in terms of Mr Samuel’s Bill, which provides that an insurance company, in case of total loss by fire, must pay' out the total sum insured. The Statutes Revision Committee has reported against this principle, but recommends an alternative that every' fire insurance policy' should bear a notice or warning to the insurer that in the event of total loss the company will either reinstate the property destroyed or pay the value at the date of destruction. More important still is the committee’s recommendation that where the full amount of insurance stated in the policy is not paid, there should be a refund of the excess amount of premiums paid. The recommendations are thoroughly' sound, for the position to-day' is highly' unsatisfactory. The only objection raised in Parliament to the recommendations was the quite irrelevant one that if insurance companies had to value properties before insuring, the cost of insurance would be increased. But valuing is the business of insurance companies, and, in fact, they have far greater opportunities for arriving at a fair valuation than the owners. In the circumstances, therefore, the refund of premiums overpaid is equitable in principle, especially' in cases where it would afford relief to mortgagors.