EXCHANGE RATE

Hokitika Guardian, 17 January 1933, Page 2

EXCHANGE RATE

RISE ANTICIPATED. CABINET’S ATTITUDE. CHRISTCHURCH, Jan. 16. Reports from Wellington indicate a possibility that the Government may propose an artificial increase in the exchange rate from 10 to 25 per cent as part of the .scheme which it is now preparing for the rehabilitation of the farming industry./For the last few days there has beep, a general uneasiness about the situation in commercial and business circles in the city, and importing ifjtQJ'ests are considering a renewal of s\qir ( nopresentations to the Cabinet against a higher rate. The agitation for high exchange among country members of the Coalition was responsible for the hurried adjournment of Parliament on December Bth last to enable the Cabinet to form an alternative policy for the assistance of the primary producer. The representations of these members were then passed on by the Government to the Associated Banks; and when the banks decided against raising the rate the Government .'accepted their verdict. The : Prime Minister (the Rt. Hon. G. W. Forbes) declared on more than one occasion that such a, question was one entirely for the banks, and that the Government would not seek to influence or to interfere with their decision,

Economists Consulted. Since tbO' ;/ adjournment of the House the a .variable”*' members of the Economic Committee have been called into consultation by the Cabinet,' and it i 0 understood that they have presented a further report'for the guidance of the Government. With the exception of Mr A. D. Park, the members of this committee in their first report advocated higher exchange as an important part of the plan of rehabilitaiton. It is believed that they Shave maintained the same attitude during the recent discussions .in Wellington, and that the Government has at last been brought round to; their opinion. • Although thG exporting season has now been under way for several months, an immediate rise in the exchange rate would still benefit the sheep farmer, since to date only about one-thidd of the wool and one-quarter of the total output of mutton and lamb have been exported.

Government’s Difficulty. If Lhe Government decides to increase the rate, in face of the banks’ opposition and of its own undertaking to stand by tlieir verdict, it will still have to determine how the increase is to be made. Assuming the banks could not be induced to alter their views, the Government might have to consider the establishment of an exchange control board or some other expedient. A conference of representatives of different sections of the farming industry has been called by the New Zealand Farmers’ Union and will be held in Wellington to-morrow. The object of the.,conference is to discuss the main problems confronting the industry and to prepare recommendations to the Government. The speakers will include Sir William Hunt, Mr W. J. jPolson, M.P., Mr C. A. Wilkinson, M.P., Mr David Jones, Mr Dynes Fulton, Mr William Machin, and Mr James Begg.