CONTROL Of EXCHANGE.

Waikato Times, Volume 110, Issue 18518, 24 December 1931, Page 7

CONTROL Of EXCHANGE.

IMPORTANT REGULATIONS. SPECIAL ECONOMY COMMISSION. STATEMENT BY PRIME MINISTER. NO MORE BORROWING ABROAD. WELLINGTON, Wednesday. A special Gazette issued to-day contains important and far-reach-ing regulations under the * iea °' n of “Export Licence Order, 1931, whioh, however, Is not designed to restrict exports, but merely to facilitate a general control of the exchange credits resulting from the sale of New Zealand exports abroad. The Prime Minister, Rt. Hon. G. W. Forbe3, 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 wunot be unduly hampered nor will they be put to any great inconvenience or any additional expense. In fact, 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 Custom* House.

Necessity for Scheme. 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 payments, 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 rale of interest. . 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 gen-era-l uncertainly 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 of 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, the Government, after a careful review of the whole .position, reached the conclusion that it is necessary to introduce a scheme for conserving the exchange resources of the Dominion in the national interests. The banks have agreed to pool their exchange resources so as to be in a position to meet the Government’s requirements. The scheme embodied in the regulations just issued was drawn up for the purpose of bringing all exchange credits arising from the sale of exports into the pool. Two Classes of Licenses. It was found that the best way >f doing this, with a minimum of Inconvenience to the commercial community, was oy licensing exports. Exporters, however, will continue to'receive as heretofore the current rate of exchange on remittances from abroad and otherwise will be put to very little trouble. Provision is made in the regulations for the issue of two classes of licence: —(A) A particular licence, and (B) a general licence. The particular licence will authorise the exportation of particular shipments of goods and all that is required in this case is that the exporter should fill in a form—which can be obtained from the collector of customs at any port—setting out particulars of the goods to be exported In the same way as for an ordinary export entry ancl indicating the bank through which the documents are to he transmitted or negotiated. The licence will be completed without any delay by the collector of customs on the bottom of the application form.

The general licence has been provided for the convenience of firms exporting continuously, subject to the acceptance of the few straightforward conditions laid down in the regulations. The licence will give freedom to export goods for a period to be fixed in the licence. General licences will he issued by the Secrelary of Industries and Commerce, hut forms of application may be obtained from any collector of customs. Once a licence has been issued all that is required from exporting firms is an extra copy of the usual export entries with the name of the bank through which the documents arc to lie transmitted or negotiated endorsed thereon. The Essential Condition. In the case of both the particular ond the general licence, the essential condition is that Ihe proceeds from the sale of the exports shall pass through Hie- hands of one of the banks doing business in New Zealand. The amount available for llnaneing Imports will, be affected by Ihe Slate’s buying so much exchange, bul fortunately. in Ibis respect, Ihe imports for the current year have lagged considerably behind exports so that the contraction required is not nearly so great as it otherwise would have Porn. II is necessary for Ihe new arrangements to operate from January 1 next, and Ihe Government desires lo give as much notice as possible Of Ihi' change. The Government is satisfied that (1)0 steps taken are absolutely necessary in Ihe interests of public welfare la order lo meet its minimum requirements for national cnmmilmouls, and Ibis being so, ooMlldenlly appeals lor Ihe support and ro-operalion of } i,o etxioineivi al community and the people generally in order iti.it the desired olijeil may lie j.dieved witlioul inconvenience or irritation.

The measure is an extraordinary one, but we are "'-.sing through e.\-

Iraordinary times, when prompt action is necessary So rope with the rapidiv changing circumstances. I ,im sure, that She people of She Dominion will agiee that New Zealand must honour her bond, and this control of the exchange resources is merely for the purpose of ensuring 'hat the Government is in a position to meet all commitments on the due date.

The Government realises that as a result of this essential rearrangement of its external financial obligations, there will he large reflections in the Budget revenues in addition to exchange costs. Consequently, with a view to assisting in the planning ot a programme for next financial year, the Government has decided to set up a special economy commission immediately after the new year. early session suggested. THE GOVERNMENT’S ACTION. GUIDED BY FINANCIAL POSITION. (By Telegraph.—Press Association.) WELLINGTON, Wednesday. The possibility of an early session of Parliament is being freely discussed in political circles, and, although the Government has not reached any decision in the matter, the Prime Minister, Mr Forbes, intimated to-day that the question would be seriously considered by Cabinet early in the new ' year. Mr Forbes said the Government’s action, would be guided in a large measure by the financial position at the end of the year. If the figures disclosed the need for further adjustments, the Government would have to face up to the situation. Mr Forbes said he was not yet in a position to say what course would be taken as the Government's policy would depend on the Treasury’s report. THE REGULATIONS. outlined in gazette. DOCUMENTS THROUGH BANK. THE GENERAL LICENCE. (Special to Times.) WELLINGTON, Wednesday. A special Gazette notice sets out the conditions under which expert licences are to be issued. It reads as follows: — Every person to whom a particular licence is'issued shall (1) forthwith on obtaining any shipping documents or drafts relative to goods comprised in the,licence, deliver the same to a branch" or office in New .Zealand, named by him in his application, of a bank doing business' in New Zealand. (2) Upon the sale of the goods comprised in the licence and immediately on receipt of any proceeds of such sale in the place where the same are sold, whether such proceeds be received by the applicant or by any other person on his behalf, pay such proceeds or cause the same to be paid to the bank referred to in regulation 6 hereof, to be remitted to New Zealand at the current rate of exchange at the time of such payment to the remitting bank. (3) Deliver to the remitting bank, together with such proceeds as aforesaid, an account sales showing particulars of the sale of the goods sold and setting out the nel proceeds thereof. General Licence Procedure. Every person to whom a general licence is issued shall: — (1) Within six days after the collector has granted a certificate of clearance for any ship carrying goods shipped by such person, deliver to the collector of customs at the port of shipment full particulars of all goods exported from New Zealand by the licensee in such ship under the authority of the licence, including the name of the branch or office in New Zealand of the bank doing business hi New Zealand to which the shipping documents or drafts relative to such goods are to be delivered. (2) Forthwith upon or before the exportation of any such goods and on obtaining any shipping documents or drafts relative to such goods, deliver the same lo a branch or office in New Zealand, named by him in his application, of a bank doing business in New Zealand.

(3) Upon the sale of the goods comprised in the licence and immediately on receipt of any proceeds of such sale, in the place where the same are sold, whether such proceeds be received by the applicant or by any other person on his behalf, pay such proceeds or cause the same to be paid to the bank referred to in regulation 6 hereof, to be remitted to New Zealand at the current rate of exchange at the time of such payment to the remitting bank. (i) Upon the sale of any goods exported from New Zealand by the applicant prior to the issue, of the licence and sold in any place after tlie issue and whether before or after the expiration of Ihe licence, immediately on receipt of any proceeds of such sale in the place where the same are sold, whether such proceeds be received by flic applicant or by any other person on his behalf, pay such proceeds or cause the same to be paid to the bank referred to in regulation G hereof to be remitted to New Zealand in like manner as aforesaid. ■ Account Sales. (5) Deliver to the remitting bank, together with such proceeds us aforesaid, an account sales showing particulars of the sale of the goods sol I and setting ouL the net proceeds thereof. A general licence may at any lime he revoked try Ihe Minister by notice in writing delivered lo the Comptroller of Customs, who shall notify Ihe collector of customs at each of Ihe ports lo which the licence refers. Notice of revocation shall forthwith he given to the licensee, hut Hie revocation shai.' nevertheless take effect irrespective of surh notice immediately on delivery of the instrument of revocation to Ihe Comptroller of Customs. Regulation G, to which repeated reference is made, deals with tlie remilling bank. If the goods comprised m the licence are sold in Australia, the hank to which Ihe proceeds of the sale are lo be paid shall ho the principal branch or ollleo in the- capit.iJ cj t v of the Slate of the bank humHoned as that lo which the shipping documents relative lo the goods are lo Pe delivered. Similarly Ihe proceeds of the sale of goods in England or oil ihe Continent snail be paid lo the principal branch or ollice in Condon of ihe hank mentioned. Every licence under the order will he deemed to liaxe authorised the bank to which the

proceeds are paid to remit them to New Zealand at the current rate of exchange. The current rate of exchange at any time for the purposes of tho order shall be the rate quoted by tl’A banks of issue doing business in Now Zealand and in the case of any question as to what is the rate quoted, the Minister of Finance may for the purpose of the order, after consultation with the banks of issue, declare the rate of exchange by notification in the Gazette. if any applicant is dissatisfied with the decision of a licensing officer in declining to issue a licence, or as to any matter relating to the security to be" given by him, the applicant may appeal to the Minister, whose decision shall be final. THE FIRST CALL. TO LOCAL BODIES AND STATE. IMPORTS MAY BE CONTROLLED. (Special to Times.) WELLINGTON, Wednesday. Under the Dominion exchange pool created under the new regulations, it is understood that local authorities as well as the State will have first call on it. A question has arisen as to the disposal of the remainder and it is stated that the banks will use their own judgment, at least in the meantime, and that should the need arise the next step would be to make regulations governing import orders. LATER. PRESS OPINION IN SYDNEY. SITUATION NOT SURPRISING. VOLUNTARILY ACT IN AUSTRALIA. United Press Assn. —Elec. Tel. Copyright. (Received Dec. 24, 10.45 a.m.) SYDNEY, Dec. 24. The Herald's financial editor, commenting on New Zealand’s action in regard to control of exchange, says the situation ,ol’ the Dominion is nol surprising to those who have watched events. What is to be regretted is that the Government considered itself called upon to do compulsorily what Australia, by the co-operation of the banks, has been able to do voluntarily and is still doing voluntarily, the mobilisation of the exchange resources to give the Government first call, in order to enable it to meet committments in London. The voluntary mobilisation of overseas funds helps the credit of a country far more than a forced measure, because a voluntary act engenders confidence. Hon. G. W. Forbes’ argument that Britain’s abandonment of the gold standard had increased New Zealand's difficulties was hard to follow. Eighty per cent of New Zealand’s exports go to Britain, from which the Dominion receives forty-seven per cent of her imports Apparently it has been Intimated to New Zealand that the renewal of short-term loans will he inconvenient.