WELLINGTON NEWS

Hokitika Guardian, 14 July 1930, Page 2

WELLINGTON NEWS

FINANCE PROTECTION.

(Special Correspondent.)

WELLINGTON, July 10

The higlr* exchange rates New Zealand on London, which at present is £5 per cent premium top telegraphic transfers have given rise to considerable discussion, mainly by those who appear incapable of. Appreciating the position. The matter whs referred to in Parliament, which was to he expected for- it provided splendid topic for self-advertisement. .It was the reference to the subject at the meeting of the New Zealand Manufacturers’ Association that gives rise to considerable correspondence in the newspapers. *,

The President of the Federation, Mr F. Campbelll, said .that it was difficult for importers to land goods at their real value. The position was aggravated because so many hanks were operating here, and New Zealand had been dragged into the trouble which Australia had got into. Parliament should look into this question, for it was wrong that the Dominion should be dragged along at the heels, of another country. The wonderful child-like faith some business men have in Parliament is really amazing. How is Parliament to look into the matter, and. are the members of Parliament competent to deul with the subject? The implication of the remarks made at the Manufacturers’ Federation i,s nofc that Parliament should merely look into the matter, but that it should act so as to protect New Zealand funds for New Zealand business. f:

Tt was suggested by another alleged authority on banking that we should cut adrift from Australia. Four out of the six banks operating in New Zealand are Australian, hi .‘character, and this lias . occasioned the plea, for financial separation from Australia. How absolutely absurd this must be' is obvious to everyone. AYe buy from and sell, to Australia, not only goods, but securities also, tilled the mere fact, that there is this business, relation between, the two countries credit . transactions; are inevitable. How is it possible to isolate New Zealand funds from a welter of transactions.

It is well to bear in mind -that money, or more properly credit „is very fluid. It is international. It recognises no country, frontier, nation, colour or creed. It has no politics. It is like water, always using its energy to find its own level, and no obstacle or hurdle can bold it In ,check, in short, credit is tin tameable, and for Parliament to “look into the trouble’’ will do no good but may. do a great deal of barm. The world is suffering today from Inch of

confldtijj.ee. and nothing should be ■v done, ,to '. prolong. that state of affairs, y There is no doubt that that the exchanges rate on Londob 'is high and detrimental to the importer. On the other hanfl the exporter is favouredTims if an importer wished to discharge a debt of £IOO owing in London.., ft. \ypuld cost him £TOS to pay by telegraphic transfer. If on the other ’-hang -an ' exporter. • here •* had £IOO owing to him in London and collected the amount through telegraph the banker would give him £lO4 12s .Gd for the right to collect that £IOO in London, so that on balancing the two ■ transact ions the bank has only made 7s 6d per cent which is not a high charge. The rate on London is high because after paying for imports there is very little credit held ; by them in London. The effect is to., put ja break on imports, a matter that has been urged again, and again, and at the same time it encourages exports which is all urged by everyone. The position of the exchanged will soon right itself, for presently shipments of new season’s dairy produce will be going forward, and the exportf will increase week by week. It is nonsense to suggest that a ring fence should be placed round New Zealand finance to keep out Australia. Tt 'simply cannot be done. The troubles of to-day the world over are due to falling prices and this was caused by the slump on the New York Stock Exchange. When wheat prices crashed'last month it made it clear that other world products would decline find much to our regret wool has lost practically the whole of the recent gain.