POOL TO CONTROL FOREIGN EXCHANGE

Rotorua Morning Post, Volume 1, Issue 105, 24 December 1931, Page 5

POOL TO CONTROL FOREIGN EXCHANGE

(Press. Assn.—

emergency measure STATE TO HAVE FIRST CALL ON THE PROCEEDS OF OVERSEA TRADE 1 EXPORTS TO BE LICENSED

-By Telegraph — Copyright).

WELLINGTON, Wednes. A special Gazette issued to-day eontains important and far-reaching regulations under the heading of "Export Lieense Order, 1931", which, however, is not designed to restrict exports but merely to facilitate a general control of exehange credits resulting from the sale of the Dominion's exports abroad. In regard to the matter, the Prime Minister, the Rt. Hon. G. W. Forbes, has issued the following explanatory statement: "Some of the commercial community, and particularly exporters, may feel a little apprehensive when this order first comes under their notice, but I can assure them that there is no occasion for alarm and on investigation exporters will find that their operations will not be unduly hampered, nor will they be put to any great inconvenience or any additional expense. •In fact, every effort is being made to achieve the object in the simplest way possible. "No change in the method of handling exports is involved and in most cases the additional work required is nothing more than the filling in of-a simple form at the Customhouse. The necessity for the scheme is a direct outcome of the financial difficulties in London which forced Great Britain to go off the gold standard. Result of Crisis "As a result of the sudden financial crisis which developed so unexpectedly and the scarcity of funds consequent upon the huge amount of foreign balances withdrawn from the London market, it is unfortunately now necessary to make an abrupt change in our financial plans and to make arrangements to meet all overseas commitments as and when they fall due for payment from New Zealand funds. "Further, it remains to be seen whether it will be possible next financial year to follow the usual practice and raise a long-term loan at any reasonable rate of interest. I may say that it is the policy of the Government to taper off borrowing abroad, but it must be reeognised that a sudden cessation under the present eeonomic conditions would add considerably to our difficulties. Even so, in view of the general uncertainty of the whole position, it is not prudent to count upon being able to float a long term loan in London next year at any reasonable rate of interest and we must be prepared to carry on without outside assistance. "The exehange requirements of the Government will be large and in order to insure that sufficient London credits will be available for the purpose, the Government after a eareful review of the whole position, has reached the conclusion that it is necessary to introduce a scheme for conserving the exehange resources of the Dominion in the national interests.

A greemont to Pool "The banks have agreed to pool their exehange resources so as to be in a position to meet the Government's requirements and the scheme embodied in the regulations just issued was drawn up for the purpose of bringing all exehange credits arising from the sale of exports into the pool. "It was found that the best way of doing this with a minimum of inconvenience to the commercial community was by licensing" exports. Exporters, however, will continue to receive as heretofore the current rate of exehange on remittances from abroad and otherwise will be put to very little trouble. "Provision is made in the regulations for the issue of two classes of lieense; (a) a particular lieense and (b) a general lieense. The particular lieense will authorise the exportation of particular shipments of goods and all that is required in this case is that the exporter should fill in a form which can be obtained from the Collector of Customs at any port, setting out particulars of the goods to be exported in the same way as for an ordinary export entry and indicating the bank through which the documents are to be transmitted or negotiated. The lieense will be completed without any delay by the Collector of Customs on the bottom of the application form. The general lieense has been provided for the convenience of firms exporting continuousl^ Subject to the acceptance of the few straight-forward conditions laid down in the regulations, the lieense will give freedom to export goods for a period to be fixed in the lieense. General Licenses "General licenses will be issued by the Secetary of Industries and Commerce, but forms of application may be obtained from any Collector of Customs. Once a lieense has been issued, all that is required from exporting firms is an . extra copy of the usual export entries with the name of the bank through which the documents are to be transmitted or negotiated and endorsed thereon. "In the case of both the particular and the general lieense, the essential condition is that the proceeds from the sale of the exports shall pass through the hands of one of the banks doing business in New Zealand. "The amount available for financing imports will be affeeted by the State buying so much exehange, but fortunately, in this respect the imports for the current year have lagged considerably behind exports, so that the contraction required is not nearly so big as it otherwise would have been. "It is necessary for the new arrangements to operate from January 1 next and the Government desires to give as much notice as possible of the change. The Government is satisfied that the steps taken are absolutely necessary in the interests of public welfare in order to meet its minimum requirements for national commitments, and this being so, con-

fidently appeals for the support and co-operation of the commercial community and the. people generally in order that the desired object may be achieved without inconvenience or irritation. Extraordinary Measure "The measure is an extraordinary one but the Dominion is passing through extraordinary times, when prompt aetion is necessary to cope with the rapidly changing eircumstances. "I am sure that the people of the Dominion will agree that New Zealand must honour her bond and this control of the exehange resources is merely for the purpose of ensuring that the Government is in a position to meet all commitments on the due date. The committee realises that as a result of this essential re-arrangement of its external financial obligations there will be large reflections in Budget revenues in addition to exehange costs. Consequenth^, with a view to assisting it in planning a programme for next financial year, the Government has decided to set up a special Economy Commission immediately after the New Year."