HIGH EXCHANGE

Evening Post, Volume CXVII, Issue 73, 27 March 1934, Page 12

HIGH EXCHANGE

BRITISH RESENTMENT

AUSTRALIAN RIVALRY

"Evening Post," March 27.

That the raising of the rate of exchange New Zealand on London to 25 per cent, is still resenfiecl,'i^ Great Britain is apparent from correspondence continuing to be received'byv representatives of; British manufacturers.- -.Those who doubted the wisdom of the" step, at the time it was proposed have been fully justified in their prediction that, coming almost immediately after the Ottawa Conference, it would be- interpreted in Great Britain as an increase in the duty on goods manufactured in Great Britain, exported to New Zealand. So it has been and so it is. While the so-called pegged /rate of 10 per cent, remained nothing, was heard about it; in fact, some exporters to New Zealand carried that 10 per cent, exchange themselves and quoted' accordingly or made some arrangement by which British exporters and New Zealand importers shared the exchange between them in'order that it should not be a. barrier to further trade by raising the price -to a point where the free course of business was impeded. But when the rate was raised to 25 per cent-.—notwithstand-ing the. removai of the. '.MOths surtax on British goods—it was felt in .the United Kingdom that this; was "the unkindest cut of all." .It is so regarded. Its effect on imports in' general was immediate, and British imports declined.with those of most other 'countries.- How imports from the United Kingdom (country of origin)' fell away is shown in the following table:— ; -.'..■ -.•■•■■ ; .:; . : : • : Imports from Britain. ' ... £ 1929 22,568.774 1930 ■....'..............' 20,329,807 1931 ................... 12,199,501 1932 t 11,496,027 1933 10,789,280 The exchange rate was raised from 10 per cent, to 25 per cent, in January, 1933. As already-stated, New Zealand imports in general declined, and not necessarily because' of: the raising "of,'the fate of ' exchange. For one thing, the greatly-reduced purchasing power of-the people has to be taken largely into account, but the effect of this, combined with the raising of retail prices attributable to exchange, sales tax, and other taxation, have necessarily had a sharply-restrictive influence on imports. - : ... ■-, . " , . BRITISH POINT t)F VIEW. How Britisli firms with, long and intimate trade connections with New Zealand view the high exchange rate x is-shown in a letter published in . the Christchurch "Times" and reading as follows:— ": ' "The exchange on shipments to New Zealand-today-is terrible, and why we should be expected to rush into our English shops and specify New Zealand produce when there is such an impost on our shipments to New Zealand passes our comprehension," states a letter from a London business house received by a Christchurch resident last week. "We can only hope that at some future date the_e?change position /will _be righted, fpr there is.no dqubt that .the/trade position between the. two countries does not justify:the : ;difference or anything' like it. "What -with the exchange .position with New Zealand and the very high tariffs into Australia, we think it is about time some-body-started an 'Anti-Buy Empire' campaign in England, as the Dominions nowadays seem to want to have the business .'all one way. "You -will probably.have noted that our Government has recently been concluding (mite/; satisfactory trade agreements with Denmark and the Scandinavian countries as weir as the Argentine, and it pipy interest you to know that we are shipping very big tonnages of our products: to Denmark; and Scandinavia, arid we .do not encounter anything like the, difficulty, exp.ense, and general ' trouble ' that we do when we try to do business , with the Dominions. However, no doiibt' these things will right themselves in time," the letter concluded. • - .STEEL AND IRON TRADE. One ; of the great steel manufacturing companies in England, writing, to its New Zealand representatives/ refers to the same subject, but ' stressing Australian competition on New-Zealand ■ trade.- Before quoting from this" letter it may be of interest to show how imports of brass, steel, and iron manufactures for 1932—the latest year available-^compare. It should be stated that New Zealand imports from Australia are facilitated by proximity and by the fact that Australia does not feel the exchange burden so keenly as Great Britain, the New Zealand and Australian currencies being practically the same in relation to sterling. The Australian imports; which have grown rapidly in recent years, are as follows:— '/ TJ.K. ' Aust. Imports, 1932. . £. ; £. Brass 'bars ....'. 2,854 389 Copper bars 2,542 618 Iron; and steel bars, bolts, ana: rods 56,634" 52,253 Pig and billet 3,271 9,015 Boltsand nuts .......... 17,081 4,503 Iron:and steel, angle and T. 3,409 1,996 Channel and girder ..... 7,179 6,333 Black.sbeet 48,833 257 Nails.. ...*...; 11,879 213 Cast-iron' pipes 18,758 1,706 Rails. ... .-... 4,794 1,909 Wheels, tires, axles .... 2,386 17,104 Fencings wire, barbed ... 51,942 10,722 Fencing, wire, plain 59,237 13,69^ Iron wire, not fencing .' 49,446 23,784 Netting 25,229 24,884 Galvanised iron . 176,364 ■ — Totals ..& 541,638 £169,384 NEW 2EALAND/S MARKETS. The' British steel company above mentioned, wrote:—"You can rest assured that if the present policy is maintained and orders are lost to Australia which would otherwise come to England, this will certainly be reflected in the amount of the purchases that England will make from New Zealand. You can regard this as pretty definite, for under the conditions that are ruling today we at Home are being compelled to support those countries who support us.'. ■ "We naturally prefer to do business with the Dominions, but if they are going to make it impossible for us to trade' with' them, then their interests in the British market Vill certainly be prejudiced."