LAND, EXCHANGE AND CO-OP. MEAT WORKS

Grey River Argus, 3 September 1948, Page 5

LAND, EXCHANGE AND CO-OP. MEAT WORKS

Budget Debate s Ranges Wider P.A. WELLINGTON, Sept. 2 'me budget aebate was continued in the House of Representatives to-day alter a minimum delay for formal business. Mr .b. R. Neale (Nat. Nelson) criticised tiie method or presenting me Public Accounts, and urged that iuture budgets contain a more intelligible review, lie mgeu an eariy overhaul of the Land Sales Act, wnich he said, was causing hardships to many people at present. While some rorm ot control was necessary, tne presen system was narsh on those wno had to sen properties at 1942 values, and uuy at 1948 prices. The prices at which sales could be made under the Act were arbitrarily fixed, while some Government valuers lacked suificient experience, especially in appraising larm properties.

RAILWAY TO NELSON Mr Neale said that there were reputedly minions oi to, ns of coal within twenty miles oi tne present, end or the iNeison-vvesc coast railway. He urged further prospecting oi these resources, which, ii they were as extensive as was believed, would be a powerful argument for extending the railway. Mr R. MacDonald (Govt. Ponsonby) said the Opposition were bankrupt or ideas with which to appraise the Government’s decision on the exchange rate. They would have liked a repetition of what happened in 1933, when the rate was altered, and one individual made a profit of £lOO,OOO in one swoop. Mr MacDonald said the return to parity would result in great economies for railways, which would be able to buy rolling stock and locomotives more cheaply, while the interest bill on overseas borrowings would be reduced. He predicted that a new form of worker-control, through shop committees or works councils, would soon be introduced in the railway workshops. The new general manager was prepared to cooperate, and would see that the new system would be made to work. It would result in a saving of thousands of pounds for the department if the workers’ views were listened to.

WAGES AND EXCHANGE Mr J. T. Watts (Nat. St Albans) said that there was an economic reason as well as political reason why New Zealand currency was put on a par with sterling. The Government took that step with the object of forestalling an application for an increase in. wages. There were, however, four ways in which inflation, could be attacked. There should be a genuine endeavour to restore the confidence of the primary producers in the Government, and if that were done, there would be a response to the appeal for more production. There should be a different import policy introduced, the reorientation of taxation and a different attitude towards the control of inflation .together with a reconsideration of the stabilisation policy. He considered that the saving to the working man, as a result oi the exchange adjustment, would be equal to 6d in the pound.

PRICE FOR ARTICLE SOLD • To clarify further, the banks buy and sell exchange, and they expect ro receive the price of the article sold as at the date' of sale. When a bank buys in London, a bill on New Zealand for £lOO sterling, the transaction, from a practical viewpoint, is exactly the same as if it had, on the same day, sold in New Zealand, a draft on London for £lOO sterling. The buying of a bill in London for £lOO sterling on say, August 10, involves the payment in New Zealand of £125 (N.Z.), and, conversely, the selling in New Zealand, of a draft on London, the same day for £lOO sterling, also involves the payment in New Zealand of £124 (N.Z.). It should readily be seen by those concerned that an importer could (a) adopt the first practice —the common practice, i.e. have his draft drawn by the exporter, and negotiated in London, but an importer (b) could, if he liked, adopt the second practice i.e. buy a draft from the bank in New Zealand and send it by air mail to England to the exporter there, to pay for the goods shipped. Allowing for a few days difference in time oy the use of air mail, both (a) and (b) effect the same object. Both pay the same price in sterling and New Zealand currency for their goodj, notwithstanding. that the rate of exchange may have changed only a day after each transaction was .initiated. 1 EXCHANGE CLAUSE “All drafts negotiated by the banks in London, as above outlined, bear what is termed an “exchange clause” which reads, with some slight variations, after the expression in words of the sterling the amount of the bill “'payable with exchange stamps, bank charges, etc., as per endorsement.” The endorsement on the draft, for say, £lOO sterling reads, “The amount of £lOO sterling, converted at £126 2s 6d, ecyials N.Z. currency £126 2s 6d” ’(stamps and charges ignored).

THE DEPRECIATION OF 1933 On January 20, 1935, the converse position arose when New Zealand currency depreciated from £(N.Z.) 109 12s 6d equals £lOO sterling, to £(N.Z.)124 10s equals £lOO sterling. Importers will remember that, on that occasion, they paid bills negotiated before January 20, 1933, on the basis of the old rates i.e. a bill drawn for £lOO sterling was converted to £(N.Z.) 109 12s 6d. If there was any justification then for an argument that such a' bill should be paid at the new rate of £(N.Z.)124 10s, the banks would have been entitled to claim on the importers in 1933 for an additional £(N.Z.) 14 17s 6d. They made no such claims, nor were they entitled to do so, and, conversely,, no justification exists for the -maims nw being put forward by some imprtrs. Some importers are under the impression that it would be practicable to stop the payment of a oil! negotiated at a high rate, and remit, by telegraphic transfer, at to-days rate. This is not so, for the reason that no telegraphic transfers overseas intended by remitters to replace the sterling p„aid to overseas exporters in respct of drafts negotiated before August 19, 1948, can be effected under the existing exchange authorities. Apart from this, such a transfer would not, of course, have the effect of paying the-bill in the hands of the bank, and would thus not ef•feet the release of the relative documents.