EXCHANGE QUESTION

Hokitika Guardian, 1 March 1932, Page 3

EXCHANGE QUESTION

VIEWS OF CHAMBERS OF COMMERCE. CHRISTCHURCH, February 29. A statement explaining the attitude of the Associated Chambers of Commerce of New Zealand on the exchange credits pool, and indicating the extent and nature of the negotiations 'that the association has conducted, was released this morning by the President,, Mr W. .Machiu, after a meeting of the Executive. It is disclosed that ireprasenCatives of the association, tire banks, and the producers, after full, conference, unanimously recommend an alternative scheme by 'which the Government could ■secure the financial accommodation it required, but that the producers, the following day, withdrew their approval of these recommendations. The association declares its opposition to the artificial pegging of exchange and reaffirms its opinion that there should be a return to a free, open market for ex-

change. “This statement is being made,” it is said, “because of a widespread misunderstanding of the motives of the Associated Chambers of Commerce in carrying unanimously a resolution in favour of a free, open market for exchange, which has been in operation for years, and which is an entirely different matter to a pegged high rate of exchange, such as .is being advocated in some quarters. The. confusion of these two separate and distinct issues in the public mind has led to the present misunderstanding regarding the attitude of the Associated Chambers of Commerce. The association does not advocate, and never has advocated, the artificial fixing of a rate of exchange, whether, a high* or a low rate, to which course it is definitely opposed.

“The association refrained from making any public statement when notice of the regulations governing the exchange credits pool were published on December 24, because it felt that the necessary information on which to base an opinion was not available to it. The association therefore engaged for several weeks in collecting the necessary information from 'the Government, the Treasury, the banks and the producers. ■Eventually the association adopted unanimously the following resolution at a meeting on January 29: “This association considers that the method chosen by the Government to extricate itself from its difficulty of making overseas payments, by commandeering the export income of the Dominion in London, :is wrong in principle and inimical to the commercial and productive welfare of the Dominion. “The association accepts the necessity for the Dominion to provide sufficient funds * u London to meet the necessities of the Government, but considers simpler and better plans could have been devised to meet this need rather than those forced upon the community, without consultation, by order-in-Ooimcil, at short notice, and without adequate explanation or machinery for working.

“This order is causing large extra work to the people who are conducting the trade and commerce of the Dominion, and great inconvenience and in some eases considerable loss. “It 'js a contravention of the principle for which this association has stood for many years, and which has nominally been accepted by both parties in the present Government, of less Government interference in business. “The association urges on the Government the absolute necessity of an open, free market for exchange so that the rate of exchange may find its own level 'in accordance with supply and demand. “It requests the Government to invite the banks, the producers and the commercial community to confer with the Treasury in order to adopt plans for providing the Government with funds for its necessities, without canning injury to 'the business ot the Dominion.

‘•lt strongly .impresses'upon the Government the necessity for immediate and drastic reduction in its expenditure so that its temporary borrowings may progressively decrease.” “The Government,” continues the statement, “acceded to the request ol the association and called the desired conference. This took place on ieb. lltli, and was attended by members ot Cabinet, the ’Secretary of the Treasury, representatives of the banks, the producers, the municipalities and this association. -Vs a result of that conference a committee was set up, representative of the banks, 'the producers and the association, to explore practicable methods 6f securing a free exchange market, while securing to the Government. the amount of hinds it required in London. The committee agreed upon a formula of an entirely practical nature, and ‘this was the same day reported verbally to the Prime Minister and confirmed ,to him in writing hv tile -Associated Chambers. It appeared that a way out of the present difficulty, acceptable alike to the banks, the primary producers and the commercial and industrial community, had been discovered. The members of fhe committee were to place before their respective bodies the recommendations they had agreed upon. These recommendations have been approved by the .Associated Chambers, but the day following that on which the committee of the three interests arrived at the joint recommendations mentioned, the producers withdrew from the agreement. 'll"' whole question has now been placed in tho 'hands of a Committee of !vonomists and it 'Seems ‘that this association can do no more in the 'meantime. (Consequent oh flic withdrawal ot the producers and the appointment of the Committee of Economists, the lr.inks have not proceeded to giVo detail consideration to the recommendations. “Throughout the whole of the nego--1 tiations tho Associated Chambers has

endeavoured to he helpful and constructive in its proposals, and is desirous now of making public the exact nature of the recommendations made by the joint committee, but this it is not permitted to . do. The association is still of opinion that (1) there is no necessity for - the present system of operating the exchange credits pool, (2) there is no necessity for the taking ■away from the exchange market of that measure of competition which in the past has been such a satisfactory check on exchange rates, and (3)" there is no., reason why the banks should insist that all export money s should be remitted to New Zealand, and all moneys for import requirements remitted back to London, thereby duplicating a! large proportion of the exchange busi- i ness.

“The association would have made its position plain before this, but it felt it could not make any statement because of the negotiations that were in progress. A letter has been despatched to the Prime Minister asking him s to keep in mind the recommendations of this association when considering the report of. .the Committee of Economists, which recommendations this ! association considers to be a practical solution of the difficulty. The association is shill prepared to be of assistance in any way possible.’’