The Guardian And Evening Star, with which is incorporated the Wost Coast Times. FRIDAY, JANUARY 16, 1931.

Hokitika Guardian, 16 January 1931, Page 4

The Guardian And Evening Star, with which is incorporated the Wost Coast Times. FRIDAY, JANUARY 16, 1931.

ADVERSE EXCHANGE RATES. The intimate relations between Australia and New Zealand is being brought to mind very pointedly by the rates of exchange imposed by the banking institutions on remittances of money from the Commonwealth to the Dominion. The situation is brought home specially by reason of the effect on the timber industry. Particulars ill regard to the matter were published yesterday. Actuarly the import is about equal to 2s per 100 feet of timber sent to Australia. That is, in remitting the money in payment for the supplies sent from New Zealand, the banks will charge the remitter an amount equal to about 2s for every 1.00 feet involved in the transaction. In other words the cost will be 20s per 1,C()I) feet of timber. This is a large over charge, and in the state of the industry is more than it can hear. It means the further crippling of the industry for it lessens the possibility of a payable expert trade to Australia. The millers have had a difficult time in trying to retain the Australian market. Our own Government damaged the trade tremendously a few years ago by a quite unnecessary embargo, and as a result foreign timber obtained a footing in Australia. Next came the difficulties about the Australian tariff, but fortunately the position was saved in that respect, thanks to timely intervention. But along came the Australian slump. and the decline in orders. On top of that is the heavy toll of the exchange levy imposed bv the banks for the protection of capital in Australia. There was the hope that the heavy impost placed on business would not affect legitimate trading affecting the needs of the two communities, but enquiries have disnelled that hope, and it is found the high exchange rates do apply. 1 he timber trade is most important to this district, but the prospects with Tenant to an early revival are affected by tho exchange imposed. Representations to mend the position are being made, but the matter is outside the

control of the Governments. The question of reciprocal trading relations between the two countries do not come into the picture. As far as the general trade balance is concerned, the situation does not justify the extra levy. The bankers, however, are desirous of conserving capital within Australia, and arc making it more

•,n I more costly to send the money out of the Country. From their point of view they are trying to maintain a lefinite c-ondiii: n of affairs, and the length they have gone in regard to exchange shows how- serious is the financial position in Australia. Trading, according to their dictum, has to bear its share in helping to maintain the best equilibrium possible, and all classes of business with Australia are now subject to this special impost. dually there are two forces at work -n Australia endeavouring if not to edeem the position, at least to mainain a degree of solvency, and so •ivc a general debacle financially, there is the political action showing for more re venue to carry oh the Government. of the country on the usual lavish lines, and the bankers 1 fiction in the endeavour to maintain a safe •balance. The situation reveals the extreme difficulty of Australia, anti in the light of its effect on New Zealand trade, this country must now realise how it is affected by the general financial position. It is difficult to see how protests from this side nf the Tasman Sea can he at all effective. Australia has its difficult, way to go, find all sections are doing the best they rail with the means at their disposal. Renllv the authorities--loth political and financial—are endeavouring to ring-fence Australia by financial oblianthms that all trade and finance possible may be kept within the Commonwealth. Just where s"eh a policy can end is hard t-o say. It must have a very retrograde effect on general trade and development. Raw materials required within the country (and timber is a very important commodity for Australian development) will rise, in price, for this levy by way of exchange must go on to the costing. But while timber-manufactured goods will he dearer in Australia, because of that there will be less demand, and that stagnation will have its ill effects within Australia also. The complexity of the financial situation in the Commonwealth is revealed at every turn of the Wheel—and the Cud is not yet.