CREDITS POOL

Wanganui Chronicle, Volume 75, Issue 140, 16 June 1932, Page 7

CREDITS POOL

EARLY ABOLITION THE REASON GIVEN STATEMENT BY PREMIER EXCHANGE RATE LEVEL [ Per Pree» Association. ] WELLINGTON, June 15. (Discussing the steps taken last December to provide adequate overseas credits, the Primo Minister, Hon. G. W. Forbes, said to-day that the Government then had to devise some plan to ensure being able to meet its commitments. The pool was entered into on the understanding with the banks tha* it should be done away with ns soon as it was no longer absolutely necessary. At the time the poo! was established it had been estimated that the Government would require £12,000.000 at the rate of £1.000.000 a month. Tn addition to this, it was considered that local bodies would require about £2.000.000 ordinarily, therefore the Government would have had to rely on the pool for a year, and its abolition would not have been effected until next December or early in January. Explaining the reason for the abolition of the pool at the end of six months, Mr. Forbes .aid that the raising of the recent £5.000.000 loan end the disposal of certain Government securities in London, had eased the position considerably. It was originally anticipated that use would have to be made of the pool in order to ment Treasury bills amounting to £4.000.000 falling due. These, however, had been funded, and the disposal of the securities in addition. baT meant that *ho Government needed nnlv about £6.000,000 or half the original estimate fr<n the exchange credits accumulation. Exchange Rate. Mention was mAde of the exchange rate problem, but Mr. Forbes reiterated his previous statements that the Government was not concerned with the fixing of the rate in anv way whatever. The question was one for the banks. It was believed in some nuarters that once the pool was abolished the rate of exchange wnuld start to fluctuate immediately. There wafi no justification for this assumption, for as far as the Government was concerned. the pool had nothing to do with the rate. The banks would no doubt decide whether the wresrnt rate was a correct one. but. the mere removal nf the pool did not mean that ♦here should be a simultaneous change in the exchange rate. Wlmn asked what would be the position if one bank derided to adnnt a rate whirh the nthnr bank” did not favour, ho said that the hank that broke awav would have tn be prenarod to stand bv the rate it fixed and it was not to be oxnoefod that, .such a serious move would bp made with out living fnP consideration to the imnlicarions it mi"ht involve. Tn the same man if fho Government wort to take unnn itself the rosnonsibility nf fixing the rate, it would have nrovide itself with sufficient roservn« tn maintain that rate much in th«

I(I lIUII ill'll" - ,3 .nmi. manner ns Grant Britnin nnd astahlished a fund of £156.000.000 to bring about the stabilisation of the st e rlin g.