EXCHANGE ON LONDON

Wairarapa Daily Times, 19 January 1933, Page 5

EXCHANGE ON LONDON

PROPOSED INCREASE. LEADS TO CABINET CRISIS. A REPORTED RESIGNATION. WELLINGTON, Wednesday. Although no- official confirmation has been given, it is believed that the Hon. y? Downie Stewart has resigned from ~the Ministry, being unable to subscribe l to the programme of emergency measures which it is proposed to place before Parliament next week. It is understood that within the past fen- days, a majority of Ministers have agreed in broad outline upon a policy -for presentation to the House. On •the exchange rates, it is stated, Mr Stewart has been at complete variance with other members of the Ministry. . It is understood that the Coalition leaders, in an endeavour to maintain an unbroken front, have been attempting to persuade Mr Stewart to reiu the Cabinet. He has been approached by several Ministers during ' the past few days, but it is understood that he has remained firm and that he is not prepared to take back his resignation. Although, when Parliament adjourned six weeks ago, the Prime Minister was insistent that the level of the exchange rates was a question entirely for the banks, it is now stated reliably that the Government does not regard an increase in rates at all unfavourably, and there is reason to believe that the Government will shortly initiate a move to bring about a measure of exchange inflation. "When Cabinet settled down to formulate a plan of action after Parliament adjourned, it is believed that strong pressure was brought to bear within its ranks to secure the approval of a general plan whose keynote was the raising of exchange rates to about 25 per cent. Added to this, it is understood that the committee of three economists who have been advising Cabinet recently have repeated

their assertions that the most effective

.relief for the farming community ayliould he secured through a higher exrate. In view of the attitude of'the banks, it is stated that if the Government brought about an increase it would have to take the responsibility of redeeming London funds which might accumulate. In addition, the Secretary of the Treasury has estimated that the raising of the exchange rate would have an adverse effect on the Budget to the extent of about £3,500,000. This responsibility, it is understood, Mr Stewart, as Minister of Finance, is not prepared to shoulder. The position at the moment is that, he has defined* his attitude clearly to Cabinet, with the statement that he cannot subscribe to the proposed policy. In view of the apparent determintaion of the Government to go ahead) with its proposed programme, Mr Stewart is stated to have tendered his resignation.—(P.A.)

BUSINESSMEN’S PROTEST.

WELLINGTON, Wednesday.

The agitation by farming interests to raise the exchange rate was considerecLat a largely attended meeting of Wellington business men to-day.

The following resolution was carj|Led:— i ' That this meeting views with grave concern the advocacy of the Farmers 5 Union, in favour of a 25 per cent, exchange rate. It considers that the farmers’ conference is advocating, as some of the members present admitted, a high artificial rate, and: that such a rate, being a false rate, can only be maintained by the Government guaranteeing the banks against losses. Such an undertaking must involve the Government in heavy expenditure, the exact amount of which cannot be determined, and which must lead to higher taxation. 5 ’■—(‘P.A.)