WELLINGTON NEWS

Hokitika Guardian, 9 July 1930, Page 2

WELLINGTON NEWS

POLITICS AND BUSINESS.

t" (Special Correspondent.!

•„ WELLINGTON, July 8. . There is no doubt that to some ex-’ tent^ trade and commerce]/ ox; as it is more , generally called business is dull ■because politicians trill insist upon interfering with commercial affairs. This;*: constant interference/ is unsettling' and has helped fo'j.creat akfeeling pf want of cbisdieneeL;:V;Thei other day an the of the exchange between; »«d. London was .referred to, .and Appropriately enough -Those Who. had least; knowledge of the subject had most to say. * 'Tile Prime Minister stated that the rates of exchange were not fixed by ' the '■Government but by the Associated Banks, and one may well ask who else&should fix the rates. The banks are with their own money. They buy and sell credit just as a rifbrehant buys and sells tea or sugar and the price is regulated by thef'supply and the demand. Oil's member wanted to know what steps the||Governmettt would take ill order to tjeduee the high rate of exchange. Wlipt can the do? ;'; liftder the 'Board, of Trade, Act the Go|ernment (rigid Ly .Orderjin-iOoini-cil Mould fix the' rate of exchange but thalfc'. will not solve! ./the prdblenv If an (importer wished.. to obtain money in London and ‘his-Lank- was- unable to Accommodate him,, .no of pri^ ! fixing would , help L irrl. ‘On thd other hand if the bank had an ex * ceis.?f rtfr. funds in 1 London it would p’robably/be'glad to' take a much-.low-er rate than fixed by the Government. Jfc i| purely a matter of supply and demand. The banks must always bold a minimum credit in London and it depends entirely on the volume of that? credit what 'the exchange rate will be. The official exchange rate on Lon-

donyin the Dominion is £5 2s 6d per — x tin Australia it is more, and . 3 desiring funds in'London' Ur-1 y have paid as much;as 7 or, 8 percent. If there was a scarcity of navvies in district».and* .these iweray urgently required it is obvious that the [employers would: he willing to pay; 1 considerably more than normal wages | to [ifecure their ; services. That. is merely paying a high price for labour | owing to its scarcity, or in other j worlds the demand exceeds the supply flit is mo,»different, dealing with credit or with exohanges Another member .stated that apparently the hanks in New Zealand had the .right to levy a 5 pet cent duty oil goods imported lute New Zealand. Tli#; banks have no «uch fight and do .pot claim to have. It was conveniently admitted by these very clever politicians that the primary producers are greatly benefited by they present exchange rates and the barijfi have not gone out of'their way to fponfer ahy special benefit on the exerts of our primary products. Here again it is' entirely, a question of supply, and demand.''"'The' banks want moifp money in London, and they can obtain Londmf futids 'through the sale of flVew Zealand [produce. The fall in the price of. commodities and the withholding of produce from shipment ■ has resulted- in the banks handling less money, and to stimulate; exports;;;which will provide them with London funds they have made the rates of exchange profitable to the exporter. 'The present position of the exchanges must be causing bankers a good deal of trouble and! .anxiety, and it is well known amqjngst the business people that the banks are doing' tlieif utmost Jo provide their clients with • laccommodan tioi).

Bankers are not miracle workers; thelvioanno't?- fniuimh' fnnds “that they do fjibt possess. To become possessed of -sbese ave. ;making the position attracjive'to exporters and-.un-attractive to importers, the position wil| right itself, and presently , a point will he reached...when it would be to ythe'. .rates, t° the;smporier, , 1 i The exchange > consider,abljf worse in Australia .than' it is here! and if the Federal. Government could by interfering with the banks ease the exchange position it would have; done so. -The Federal Government has sent an S.O.S. to the Hank of ijnglandfiahd- as:' a result- Sir Otto Nieftieyer,- one "of the principal officials; of the Hank is on his way to Australia with a view' ot finding a solution of: these growing difficulties of providing; exchange to cover Australian payments overseas. - This is wliat -the Labour Government in Australia lias found necessaryf. but here the members of Parliament want the Government, to do something without indicating/ what that* something should be. . After all tyheso 'oa ok lings of .Labour „ members remind one ’of ; rthe hackling •of the hen wlio lias just laid an egg. It is a form of advertising adopted bv Labour- members to keep their names well .before the unthinking section in their constituencies. And they are paid £450 a year for .this.