THE EXCHANGE RATE.

Waikato Times, Volume 112, Issue 18796, 18 November 1932, Page 7

THE EXCHANGE RATE.

INCREASE DEiMANDED. AGITATION AMONG MEMBERS. BANK NOT FAVOURABLE. WELLINGTON, Thursday. Agitation for the raising of the exchange rate, New Zealand on London, to at least 25 per cent has emerged from the representations made to Cabinet last evening by a strong body of private members from both the Reform and United Parties. A letter embodying this request was circulated discreetly in the House of Representatives this evening with a view to strengthening the hands of the Government in making representations to the Associated Banks. It was learned this evening that the campaign for a higher exchange rate had its genesis, as far as the Parliamentary aspect was concerned, In an interview ‘on Thursday of last week between the Prime Minister, the Rt. Hon. G. W. Forbes, and six Reform members, the Hon. A. D. McLeod, Messrs H. M. Campbell, K. S. Williams, T. D. Burnett, J. Hargest and W. P. Endean. They the Mew ' Jfchat farmers were facing a desperate situation, and unless the Government would take some action, the country “must inevitably be ruined.” They Insisted strongly that they would not stand aside while the Government remained inactive. Suggested Loan Objected to. It is understood that Air Forbes assured the members that he had made every effort to better the position. He said he had conferred with the leading banking interests of the country, but he had been unable to get any further forward. The members then suggested that they should Interview representatives of the Associated Banks with a view to pressing their case further. The six members waited on the general manager of the Bank of New Zealand, Sir Henry Buckleton, the same afternoon. The case for a higher exchange rate was again advanced, but it is stated that the representations were not very favourably received. After a long discussion, it is understood that the members were advised to endeavour to persuade the Government to borrow £5,000,000 at 5 per cent, for the purpose of financing farmers, mainly in the form of export subsidies. That course, however, was objected to by the members on the ground that the rale of interest suggested was too high, one member of the deputation remarking that they could not possibly go to their constituents and ask for permission to add a further £5,000,000 to the public debt, especially at a time like the present. It was claimed that was all the suggestion concerning the loan would amount to, because farmers would have to pay what they received to mercantile firms, and those firms would, in turn, have to pay it back to the banks, with the result that no one would benefit. It is reported that the suggestion was then made that the members should return to the House and promote a resolution requesting the Government to take action to have the exchange rate increased to 25 per cent. Even If that resolution were not passed, it was stated it would, if supported hy a large number of members, carry sufficient weight to achieve the object aimed at. Evidently that suggestion was not adopted, for 'on returning to the House it was decided to canvass Government members with a view to securing greater support for the move to have the exchange rate increased. That resulted In the deputation which waited on the members of the Ministry last evening, there being 29 present, Including Cabinet Ministers. Majority In Support. It is gathered that the Prime Minister has admitted that he could not resist such a united request, and he agreed to make another effort toward improving the position from the primary producers' point of view. The majority of those who waited on Mr Forbes were definitely of the opinion that the exchange rate should be increased, and in support of this belief, they quoted the text of a cablegram received by one member of the deputation, indicating that (Australia had benefited considerably through the high exchange rate in operation there. It is considered that if the 25 per cent rate is conceded, there is a prospect that the Ceneral Reserve Bank Bill will not he proceeded with. It has been common knowledge for some months that one of the strongest advocates In the Cabinet for the high exchange rate has been Air Coates, and it Is scarcely any secret that he is In full sympathy with the present movement to bring about an Increase in the rate. On the other hand, Air Forbes has all along held the view that the question is one for the banks themselves.. However, it is believed that lie is now inclined to modify Ills opinion. There was also a suspicion that an effort was being made to expedite a decision before the return from London next Wednesday of the .Minister of Finance, Die lion. W. Downio Stewart. As the Reform Party comprises many farmer members, that section of the Coalition Parly is naturally most strongly represented in the group which is urging a higher exchange rate. However, tiic deduction that the movement is purely a Reform Party one is not justified in the iignt of the developments which have occurred so far. it was not without s<gnificancc that (lie two spokesmen at last evening's deputation to the Cabinet were Air McLeod, a Reform member, and Air C. 11. Cllnkard, a United member. The negotiations lo date have been entirely friendly and inquiries fai: lo substantiate the suggestion that any threat endangering the continuance of the Coalition Government has been made hy those anxious to secure the | higher exchange rale.