THOSE PROFITS

Rotorua Morning Post, Volume 2, Issue 448, 4 February 1933, Page 5

THOSE PROFITS

members inquisitive ■ * .V w,- -- -g. ,W- t f •£ WHO KEEPS THK PROFIT UNDER EXCHANGE RATEPOSITION JNDEFINITE Wellington, Friday. One of the most vivid periods . in the generally dull discussion of the Banking Indemnity Bill' was reached when members tried to tra,ce what what would happen to the profits made on New Zealand funds held in London and bougJ.it ' at 10 per cent. premium, but whicK were* no.t sold by banks when the rate changed.to £125. The 'amouht involVed "was various'ty guessed, the 'highest e'stimate mentioned being £5,000,000. ' **'" ,";s •«. Mr. Walter N-ash asked the Minis.ter of Finance if ihe Governmeht waS going to get the advaritage' "off the extra profit which would be mdde'oii the London funds boiight at £110 ah'd sold after January 20 at £125. There might, he said, be £5,000,000 'held in this way. The Rt. Hon. J. G. Coates: "W.a . take all funds bought >at £125." But what hecomes of the funds held by the banks prior to the arrarigement?" 'asked Mi*. Nash. The Prime Minister declared the bill had nothing to do 'with '' those funds. Its purpose was to huy the surplus funds bought a't £125. -Those bought at £110 were entirely separ- ■ Mr. H. G. Dickie : "And dhje banks get the profit!" ' ' *' The Prime Minister: "The funds already in hand' may affec't the surplus." • ; : " "f " • ! Returning to his point, Mr. - Nash declared that the banks would 'rbe \ making a 15 per cent: profit on* th'e funds in hand. He suggested tbkt this position wanted watch'ing. The Hon. A. Hamilton, „Post-master General, suggested that if £5,000,000 were in hand before the arrangement, what was there before January. 20 did not eome into thd picture. The Government's concem" wa's mth the funds bought at £125 'and once that total was sold there was no liability on the , Government. V * Mr. Parry: "And the banks get tlie profit on funds bought at £110." The Minister: "That's ofdinary trading." (Opposition laughter)/. Mr. Dickie said that7 it -was- well known that as the importers were not requiring funds at the moment the banks had considerable funds in London, the total being- stated, at'anjrthing between five and ten million. Surely he -asked, the Treasury had some idea of the position, because later on the contention might be rai'sed, when the exchange dropped, that the banks would malce' a' loss. His idea was that the Government ishould have bought the whole : lot. • )>'•'- The Hon. A. Hamilton: • "There might be none." Mr. Dickie. "The Minister Should know hetter. He has only to wat'ch the trade halance." • • . • The Opposition challenged Clause 8, empowering the investmefit of exchange funds as an indication of its opinion regarding possible profits; but the clause was retained by 43- votes t.n 28.