RATE OF EXCHANGE

Waikato Times, Volume 112, Issue 18796, 18 November 1932, Page 8

RATE OF EXCHANGE

COALITION DIVIDED. STRONGLY OPPOSITE VIEWS. PARTY DEFECTIONS POSSIBLE. CITY MEMBERS ANTAGONISTIC. (Special to Times.) WELLINGTON, Friday. The possibility of defections from the Coalition ranks in the event of action being taken to artificially iaise the rate of exchange, is being freely mentioned in Parliamentary circles, and it is reliably stated that the Government is likely to forfeit the f*ermanent support of at least three of its dozen city supporters If the issue is brought to a head. The claim is made by the 'Country group that their representations to Cabinet last night had . the support of several of 'the city members, but inquiries show that as far can be ascertained only two members fall within this category. One of them has hitherto been a strong opponent of a high- exchange policy, but he frankly admitted to-day that he had radically changed his views, and had delinitelj come to Hi & view 'that a high artificially created -exchange was the only tenable alternative in the abnormal circumstances facing the country. “1 am right for a high pegged exchange,” lie declared. “I would not mind if it were fixed at 50 per cent, above .par. We are essentially a primary producing country and in ruy opinion all other measures having failed we must look to this as the surest method of saving the country from bankruptcy and collapse.” •In striking 'contrast is the open declaration of another prominent city Coalitionist. “To Increase the exchange rate artificially would be utter lunacy." 'He said: “If the Government allows it•elf to be stampeded into this devastating action 1 will be finished with it once and for all.” Dire Consequences Prophesied. This member added that an increase would not bring another penny piece into the country, but would dislocate trade', increase the cost of living, drastically reduce the wages of city workers, add an unbearable burden to the oversea debt service and precipitate the bankrupty of the farmers which it was designed to avoid. The blind faith of farmers in a high pegged exchange was appalling if it were not so tragic. They appeared to labour under the delusion that the Increasing of the exchange would produce some mythical bankers’ fund from which largesse to primary producer could be distributed at will. A Wellington member who has given general support to the Government expressed utter indignation at any suggestion that the Government should decide to peg exchange at a high artificial rate. He indicated very plainly that he would use every endeavour to prevent such action being taken. “I’ll fight it tooth and nail,” he said. This member mentioned the possibility of a change being effected bj Order-in-Council by reviving the exchange credits pool which had been established at the beginning of tTTtS year, and said it would be "a scandalous thing" if members a f Parliament were to be denied the right to vote on a matter which was of such vital concern to the whole of the Dominion. The prospect of a change being made before the return to New Zealand next Wednesday of the Minister of Finance (the Hon. W. Downie Stewart), was also mentioned by this member, who said he could hardly conceive that the Government would do such an unfair thing, especially as It was known that Mr Stewart was opposed to any artificial high rate of exchange. BANKS' ATTITUDE. STRONG .OPPOSITION REPORTED. GOVERNMENT APPROACH LIKELY. (By Telegraph.—Special to Times.) WELLINGTON, Friday. Considerable Interest in the move taken by a section of the House of Representatives for an increase in the rate of exchange was expressed by Sir Henry Buckleton, general manager of the Bank of New Zealand, in the course of an interview this morning. Asked what the attitude of the Bank of New Zealand was likely to be, Sir Henry said lie was not In a position to say. If the bank was approached directly by the Government the question would have to be considered at a special meeting of the Board of Directors. It was probable, of course, that the Government would approach the Associated Banks on the subject, in which case the question would be discussed by representatives of the banks in any case. However, the policy of the Bank of New Zealand, which in (he past had boon opposed to any artificial high rate of exchange, would be decided by tlio Board of Directors, who probably would moot early next week. From inquiries made in oilier quarters it was authoritatively learned that the raising of the exchange rate to a higher level was strongly opposed by •the National Bank of New Zealand, the Union Bank of Australia, the Bank of Australasia, and the Commercial Bank of Australia. Among the reasons given for opposing an increase was that any artificial increase in the rale of exchange was absolutely against the best interests of every section of the. community. NON-INTERFERENCE DESIRED. BUSINESS MEN'S ATTITUDE. REQUEST TO PBIME MINISTER. /By Telegraph.—Press Association.) AUCKLAND, Friday. The Chamber of Commerce lias telegraphed the Prime .Minister strongly urging non-interference by the Government. in the exchange situation.

I The arbitrary fixing nf n high rata, it ! deelnres. would probably form tbo j (iovernmant to levy an export, tax as I the only means of balanelng the I Budget. Further, it. would bn erpiivI alent. to an additional tariff and conj tr.ary to the spirit of the Ottawa agreements.