BANK OF N.Z.

Hokitika Guardian, 26 November 1932, Page 5

BANK OF N.Z.

AGAINST INCREASE

IN RATE OF EXCHANGE

(Per Press Association- Copyright.)

/WELLINGTON, November 25,

Following a meeting this afternoon of the Directors, a meeting of the Associated Banks was held.

The Chairman, Mr Grose, at the conclusion, said that there was no announcement to make. It is understood that the Bank of New Directors decided, by five to one, against increasing tne rate of exchange. It is bedewed that, in the course of four hours deliberations, the Bank of New Zealand Directors discussed the general financial condition of the country.

Certain important proposals will probably be made to the Government in concert with the other trading banks. A resolution of opposition to the suggestion to raise the exchange rate was passed by the Directors of the Bank of New Zealand meeting to-day.

Although the Associated Banks have not yet met, this resolution may be taken as the definite express banking opinion.

The resolution, which was conveyed to Mr Forbes, i# as follows:“The Board, having given consideration to the request of a number of Members of Parliament that, to assist farmers -to surmount their difficulties through the present low prices for farming produce, the rate of exchange on London should be raised to parity with thei rate ruling in Australia, re-affirms the views expressed by the Chairman at the annual meeting of the Bank, held on June 17th. last. Briefly, those views are : That it is not the business of the banks to 'adjust the exchange rates to meet variation in the price of produce; nor should the banks be influenced by the rates prevailing in other countries, but by the supply and demand of money between London and New Zealand.”

“The Board fully realises the difficulties confronting the primary producers at the present time, but it is satisfied that the raising of the rate of exchange under the existing conditions, while it might be a palliative, would not hie in the.best interests of the Dominion ; and the Board is, therefore, not prepared to depart from sound banking principles for the sake of expediency. “The other 'alternative for affording material assistance to the primary producers appears to be that of granting a subsidy, but as the Government has indicated its objection to such a course, the Board does not see the necessity of elaborating its view* thereon, If, however, the Government i'c-eousi<lei's its objection to a subsidy, the Board will bo pleased to collaborate with it with the view of granting financial assitance to the full limit of its resources ” “As another alternative to either of the above methods, the Board suggests that the Government consider the question of paying all of the farmers’ rates to the local bodies for the current year, and, at the same time, waive its claim for land tax. It is estimated that this would cost the country £2,000,000, against which must be set the cost it would incur on Government operations if the rate of interest were' raised as desired.

“Such remission would hiave a twofold benefit. Not only would it be the means of assisting the majority of the farmers to carry on, but such a payment to the local bodies by the Government would enable them to carry out their overseas commitments in conection with their interest on loans without the increased costs which would he ‘entailed by the raising of the exchange rate. Should the Government favourably consider this method, the Board would be prepared •to provide the amount required on reasonable terms.”

It is understood that the banks have other schemes, including a moratorium for stock and station agents, to place before the Government.