BANK OF N.Z.

Rotorua Morning Post, Volume 2, Issue 390, 26 November 1932, Page 5

BANK OF N.Z.

(£Tost" Special Commissioner) .

PREPARED TO ASSIST THE GOVERNMENT WITH ALTERNATTVES SUGGESTIONS MADfc

Wellington, Friday. A resblutiori opposing the suggestion to raise the .exchange rate was passed by the directors of the bank of New Zealaiid at a meetihg held | to- bay. Although the Assbciaied i Banks have not yet met, this re- i solution may he takeh as a definite ' expfession of hanking opinxqn: The resblution wliich was conveyed to the 'Prime Mimstei', Rt. Hon. G. W. Forhes, is* as follows. "The hoard having giveh consid- | eratiori to the request of .a number of members of Parliament that to assist ' farhiers to surmount their difficulties through the present low prices for farming produce, the rate | of exchange on London should be raised to parity with the rate ruling in Australia, re-affirms the views expressed by tlie chairman at the ahnuai riieeting of the hank held on June 17 last. Briefiy these views aro that it is not the business of the banks to adjust exchange rates to meet vaiiations in the price of produce nor should the banks be influeneed by the rates prevailing in other countries, but by supply and demand .m money between London and New Zealand. "The hoard fully realises the diffi-

culties 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 liiight be a palliative, would not he in the best interests of the Dominion. "The board is therefore not prepared to depart from sound bariking principles for the sake of expediency. Th'e other alternative to affording material assistance to the primary producers appears to he that of granting a subsidy but as the Government has ir.dicated its objection to such a course, th'e board does not see the necessity of elaborating its views thereon. If, however, the Governlnent reconsiders its objection to the subsidy, the hoard will he pleased to collaborate with it with a view to granting financial assistance to the full limit of its resourees. "As another alternative to either of the abdve methods, the boaid suggests that the Government consider th'e qiiestion of paying all farmers rates to 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 exchange were raised as desired. Such a remission would have twofold benefit. Not only would it be the nieans of assisting the majority of farmers to carry on, but such paymeiit to local bodies by the Government would enable theih

to carry out their overseas commitments in connection with their interest on loans without the increased costs whieh would he entailed by the raising of the exchange rate. "Should the Government favourably consider this meth'od, the board will he prepared to provide the amount required on reasonahle terms. It is understood that the banks have other schemes including a moratorium for stock and station agents to place before the Government.