EXCHANGE CONTROL

Waipa Post, Volume 43, Issue 3392, 24 December 1931, Page 5

EXCHANGE CONTROL

NO MORE BORROWING ABROAD. RESTRICTION OF IMPORTS. (By Telegraph. Press Association.) WELLINGTON, This Day. Plans for the pooling and control of foreign exchange were announced by the Prime Minister last evening. Regulations providing for the operation of the scheme were published in a special Gazette. They come into operation on January 1. The Prime Minister explained that owing to financial conditions in London the Government cannot prudently rely upon further overseas borrowing. To provide for the large amount of exchange required on public account, the Government has therefore arranged with the banks to pool their resources so that they may meet the Government's needs.

The operation of the scheme will be based upon the licensing of all exports, upon the condition that the proceeds from the sale of exports shall pass through the hands of one of the banks doing business in New Zealand. The official statement suggests that a further curtailment of imports will be necessary.

In view of the effect upon the Budget of the new situation, the Government has decided to set up a special Economy Commission immediately after the new year.

GUARDING PUBLIC INTEREST.

ACTION ABSOLUTELY NECESSARY. WELLINGTON, Wednesday. The Prime Minister, Rt. Hon. G. W. Forbes, has issued the following explanatory statement: — Some of the commercial community and particularly exporters may feel a little apprehensive when this order first comes under their notice. I can assure them that there is no occasion for alarm and on investigation exporters will find that their operations will not be unduly hampered nor will they be put to any great inconvenience or any additional expense. In face, every effort is being made to achieve the object in the simplest way possible. No change in the method of handling exports is involved and, in most cases, the additional work required is nothing more than the filling in of a simple form at the Customs House. SITUATION IN LONDON. The necessity for the scheme is a direct outcome of the financial difficulties in London which forced Great Britain to go off the gold standard. As a result of this sudden financial crisis, which developed so unexpectedly, and the scarcity of funds consequent upon the withdrawal of a huge amount of foreign balances from the London market, it is, unfortunately, now necessary to make an abrupt change in our financial plans and to make arrangements to meet all overseas commitments, as and when they fall due for payment, from New Zealand funds. Further, it remains to be seen whether it will be possible next financial year to follow the usual practice and raise a long-term loan at any reasonable rate Of interest. CO-OPERATION OF BANKS.

I may say that it is the policy of the Government to taper off the borrowing abroad, but it must be recognised that a sudden cessation, under the present economic conditions, would add considerably to our difficulties. Even so, in view of the general uncertaipty 'of the whole position, it is not prudent to count upon being able to float a long-term loan in London next year at any reasonable rate-hf; interest and we must be prepared to' carry on without outside assistance. The exchange requirements of the; ; Government will'be large and in order; " to ensure.that sufficient London credits, will be; available for the purpose; tiie:;; ■ I Government, after a careful review;!of:;.; the whole : position, reached;the conclusion that it is necessai;y> : tib; introduce a. scheme for conserving? the exr .change resources of the'Doi&inion in-;; the national interests. ; v;.The banks have agreed to pool theft'exchange ; so as to be in ;a 'position to ■ meet Jhe, Government/''requirements. iThe Scheme embodied writhe regula-, >ti6ns» just issued was drawn up for j;he purpose of bringing;,all exchange; from sale < of : *fex^.-; ports into the pool. • , * ; TWO TYPES OF LICENSE. ■ It was found that the best way of, doing this, with a minimum, of inconvenience to the commercial' community, was by licensing exports. Exporters, however, will continue to receive as heretofore the current rate' of exchange on remittance from abroad and.oth .v: . will ho put to very little trouble. Provision is made in the regulati" :- -r the issue of two classes of i-wtc.-(A) A particular license, and (B) a general license. The particular license will authorise the exportation of particular; ship-; ments of goods and all that in this case is that the exporter should/, fill in a form—which can be obtained, from the collector of cus-'.l»ys^,#t*li^-'P"<W^^l4^':*nt/-i»r': titulars -'Of the goods;' to \ be' exported '}in; the same- way';jas : for an ordinary export entry affi| lndicating the" bank through which are to ;'be:. : .tr;aiism;i^4 r > The license will be cora.>jh.ied without any delay by the coHeccor of customs on the bottom of the application form. The genera? license has been provided tor Hk convenience of firms exporting '- "*". luously, subject-to theacceptance of he few straightforward; condition-, laid down in this regulations. ' will' give-freedom to?export goods for a pei| ■ '•> be fixed in tnlificense. ■ Geiv : -- es willbe issued by the-Secr.- - xfifag dustries&lid Commerce,. but Lonns of applicatiolpmay be obtair - > -my coljecter,of' customs. .; • ' Onee k license has bee ! all that is required from &ff wl »:'■. uillfts : is an extra copy of the n.;ii: i 2pprt entries with the Lhe bank through which, the 'dociiij&ntsvare.to' 'be transmitted or neeotiw ->! endorsed thereon. >ln the case oi both the particular and (ho. general license., ithe essential . is-that the proceeds from the sale. of. the exports shall pass

through the hands of one of the banks; ?3oihg business in New Zealand. ■s&The' amount available for financing •imports will be affected by the State's so much exchange, but fortunately, -in; this respect, the imports for 'the current.year have lagged considerably behind exports so:,that, the contraction required is not nearly.so great as it otherwise worild have been. It is necessary for. the hew arrangements to operate from January 3 next, arid the Government desires -to 'as much notice as possible of the change. » The -Government is satisfied'that the steps taken are absolutely necessary in the.interests of public welfare in order to meet its minimum requirements, and this being so, confidently appeals ?for the; support,, and cooperation of the commercial community and the people generally in prder w tiiat the desired object achieved without inconvenience -or irritation." ,The measure is an extraordinary one, but we-are passing-through extraordinary .times, action is necessary to cope with the rapidly//changing circumstancej^ 7 I am sure that the people of -the :IDp■minioio i will agree that New Zealand must honour* her bond,, and, this con;trol vof the exchange '■■: resources is nierely for the purpose of ensuring that the Government is in. a position .to-meet all 'commitments., on the.;dye. ,date. '- '-, t- ' The Government realises this essential ,rearrangeni«ntij [ of- .financial there- will be large reflections getreyenues. in: addition to exchange | costs. '■: Consequently, with a view to I assisting- plahniiig .of^a^ro-^