WHY NEW ZEALAND CANNOT HAVE DOLLARS

Chronicle (Levin), 8 September 1947, Page 7

WHY NEW ZEALAND CANNOT HAVE DOLLARS

WELLINGTON, Sept. 7. Britain 's shortage of dollars was sucli that if New Zealand and other .sterling countries used their rights of convert ibility without genuinely deterinined restraiut, Britain would swiftly be deinided of the last of her dollars and con.vert ibility would die of exhaustion, said the Minister of Finance (Mr. Nash ) in a statemeiit yesterday in which he said that "stirling convertibility" meant that any country in the world which had sterling in London eould use it to the fullest extent to inake payineuts for anv purpose to any other country. The Minister added that 011 Jtily 15 last the I'nited Kingdom carried out her arrangenient under the Ainerican loan agreeinent whereby anv country reeeiving eurrent sterling in London — for cxporl — eould use that sterling at will to inake puyments to other countries or to buv the currencies of other countries. "It meant that if New Zealand decided to tuni all her currem sterling proeeeds of exports iuto dollars she would be entilled to do so, " said Mr. Nnsli, "but the essential point to reniemiier is that thougli the arrival oi .Jiily 15 placed tliese new obligations on the I'nited Kingdom it did not add one dollar 10 the resources from which the I'nited Kingdom would liave to meei tliese obligations. "Without going into details of the subsequent causes and eifects, it is suxficient to mention that Britain 's dollar resources were rapidly and relentlessly riinning low. A crisis was reached on August 20 when the newest pliase of limited con\ ertibility came i.nto being. The sterling convertibilitv to which Xew Zealand is now entitled, though technically universal, is modified iu volunie by our voluntarv cooperation. For that reason we are bending our everv thought and endeavaur to reduce 10 real essentials our expenditure in everv way which will help Britain and 011 rseives to inake the best possible use of the limited supply of dollars available at present to the sterling area. "Britain would suffer and our plight would be 110 less severe if the unwise or sellish use of sterling couvertibility resulied in the crumbling of tlie founaation 011 which that convertibilitv now rests. The foundation has three cornerstones — eeonomy, essentiality and cooperatiou. ' '