EXCHANGE CONTROL

Wairarapa Times-Age, 7 December 1938, Page 7

EXCHANGE CONTROL

ACTION TO CONSERVE LONDON FUNDS Suspension of Sterling Issue by Reserve Bank IMPORT AND EXPORT LICENCES INTERNAL LOAN FOR PUBLIC WORKS (By Telegraph.—Press Association.) WELLINGTON. This Day,. The control of imports and the licensing of exports as from today is provided for in regulations published in a Gazette issued last evening. The Gazette also contains a notice by the Minister of Finance suspending the statutory obligation of the Reserve Bank to give sterling for its banknotes. This action has been taken to enable control to be exercised over the sterling funds of the Dominion. A statement explaining the regulations and the reasons for the action taken was issued by the Minister of Finance, the Hon W. Nash. After referring to the drain on sterling funds, he said a stage had been reached when the Government deemed it necessary for the general welfare of New Zealand to take steps to conserve these funds so as to ensure that overseas debt services would be met and that sufficient funds would be available for essential imports. He said that every possible facility would be provided for preference to the United Kingdom in the purchase of capital equipment and raw materials for the extension of manufacture within the Dominion, and for the import of commodities not provided by New Zealand manufacturers.

Mr Nash also announced that within a reasonable time after the necessary arrangements had been made the Government proposed to issue an internal loan to meet public works capital expenditure.

The regulations dealing with imports and exports are in the form of two separate Orders-in-Council. One is known as the Import Control Regulations and the other as the Export Licences Regulations.

Mr Nash said that the export licences regulations were not for the purpose of restricting exports, but to obtain control of the sterling credits arising from the sale of exports. The import control regulations were designed to give the Government control over the demands upon the sterling funds of the Dominion for imports. The suspension of the statutory right of obtaining sterling funds from the Reserve Bank was a necessary corollary of the import control regulations and necessary for generally conserving the funds for use in the best interests of the Dominion as a whole. The continued fall in the amount of sterling, funds had been the subject of general comment among the business community and recently frequent references to the matter had appeared in the newspapers. Thus, the public generally were aware of the necessity of taking some action to meet the situation that had arisen. FALL IN OVERSEAS ASSETS. “For October, being the last month for which complete returns are available,” said the Minister, “the net overseas assets of the Reserve Bank and the trading banks amounted to £11,856,000 compared with £28,024,000 for the same month of last year. The principal cause of the fall in the funds is to be found in the trade figures, which show a substantial decline in th;» value of exports with relatively little fall in the value of imports. In New Zealand currency the comparative figures for the ten months ended October 31 are as follows: —

Excess Exports. Imports, of exports.' £ £ £ 1937 .. 58,187,000 46,605,000 11,582,000 1938 .. 50,262,000 45,874,000 4,388,000

Dec. £7,925,000 £731,000 £7,194,000 “The resulting drain on sterling funds,” said Mr Nash, “was accentuated by transfers of capital from New Zealand for investment overseas, and a stage has been reached when the Government deems it necessary for the general welfare of New Zealand to take steps to conserve sterling funds to ensure that overseas debt services will be met and that sufficient funds will be available for essential imports. After careful consideration of the whole problem in all its ramifications, the Government has reached the conclusion that the best way of dealing with it is to take control of the sterling funds and co-ordinate the use of them with'their proposals for increasing the production of consumable commodities in New Zealand. Only by doing this can the standard of living of the people be maintained.”

EXPORT LICENCES

PAYMENT IN NEW ZEALAND CURRENCY. An explanation of the regulations was given by Mr Nash. Dealing with its export licences regulations, he said the essence of these regulations was that a licence was required beforegoods could be exported. The main consideration for the issue of such licence was that the exporter must undertake that the foreign credits arising from the sale of such exports would be sold to one of the trading banks in exchange for New Zealand currency.

The licences were issued under three categories—particular licence, general licence and purchaser’s licence. “As the title implied, the particular licence was intended to apply to occasional shipments; the general licence would be issued to exporters who made

frequent shipments abroad, and the purchaser’s licence covered those cases where goods had been purchased for export in New Zealand by means of credits made available in the Dominion from overseas

IMPORT CONTROL

GOODS TO BE ADMITTED ONLY UNDER LICENCE. MEETING OVERSEAS DEBT CHARGES. The import control regulations were stated by Mr Nash to apply a prohibition to the importation of all goods except pursuant to a licence, or unless exempted by the Minister of Customs from the requirements of a licence. Application for a licence must be made on a prescribed form to the Collector of Customs at the port at which it was desired to import the goods. Periods would be determined from time to titne during which licensed goods may be imported. The.regulations, which were made on Monday would take effect today, and with a view to allowing importers time to lodge their applications it had been decided that the period December 7 to December 31, 1938, should be a prelininary period during which any goods imported, if ordered before the date of the regulations, would be admitted without a licence. Likewise any goods which were “on the water” on December 5, would be admitted without a licence. Goods which were ordered on or after December 5 would not, however, be admitted without a licence, notwithstanding that they may be imported not later than December 31, and he desired it to be clearly understood that a licence may not be granted for all or any of such goods. Each application would be considered on its merits.

CONDITIONS OF APPLICATION. The first period of importation (after the preliminary period which ended on December 31) would be from January 1 to June 30, 1939. A licence to import would be necessary in respect of goods imported after December 31, 1938 (unless they were “on the water” on December 5), notwithstanding that they may have been ordered before December 5, and such importations would require to be included in applications for importation during the first period, particulars of dourse, they were to be imported within that period. Importers would also be required to show on their applications respecting goods for importation during te first period, particulars of any similar goods which were “on the water” on December 5, and which would be imported during that period. “In order that their applications to import goods during the ‘first period’ may be considered,” said Mr Nash, “importers will be required to state in their applications particulars of their importations of similar goods at the port in question during the six-monthly periods January 1 to June 30, 1938, and July 1 to December 31, 1938. The date of importation of any goods is the date of arrival of the importing ship at the first port in New Zealand. “The ■ administration of the regulations is in the hands of the Customs Department and much additional work will, of course, devolve on that department in giving'effect to them. Collectors of Customs at the various ports have been instructed respecting the new procedure and full information in that connection may be had from them.

SECURING FOREIGN CREDITS. “To secure foreign credits for purchase of imports, it will be necessary for importers to present their import licences to a trading bank. The point I would emphasise is that importers should obtain a licence before ordering goods as otherwise they may find themselves in the position of not being allowed to land the goods. “In dealing with import applications, the policy to be followed will be along the lines which have been enunciated by the Prime Minister at various times, namely, to provide first for overseas debt services, both Government and local body, and secondly, for the purchase of goods and materials, preference being given to those which constitute essential requirements and which cannot be produced to advantage in the Dominion.

“In this way,” said Mr Nash, “the best possible use will be made of the Dominion’s capacity to manufacture goods and the available foreign credits from exports will be used to the full for import of other goods, the objective being to maintain the highest possible standard of living for our people. Having regard to the extent to which

our exports are marketed in Great Britain, the Government fully recognises the obligation to buy as much as possible from that country. HONOURING COMMITMENTS. “May I again reiterate the purpose of the regulations and the control is to conserve our overseas funds to ensure that our debt commitments —local body, national and private—are met on their due dates, and that the payment for essential imports is fully provided for. The necessity is due to the continuous decline of our sterling funds on account of over-importation, particularly during the past two years, accentuated by capital transfers during the past year. There may be a little inconvenience till traders and the general public become familiar with the new procedure, but in the main in so far as sterling balances are in hand all funds legitimately required will be made available.

“Our trade with the United Kingdom should under the proposed arrangements be extended, as every possible facility will be provided for preference in the purchase of capital equipment and raw material for the extension of manufacture within the Dominion, and import of commodities which are not provided by our own manufacturers.”

OFFENCES AND PENALTIES

Severe penalties are provided for offences against the regulations dealing with export licences. A person will commit an offence who makes, in his application for a licence, any statement which to his knowledge is false or misleading in any material particular. It is also an offence to mislead or to attempt to mislead any person concerned in the administration of the regulations, or to commit a breach of the general or special conditions of any licence. Offenders against the regulations in relation to any New Zealand products (within the meaning of section 10 of the Reserve Bank of New Zealand Amendment Act, 1936) are liable for a fine of £lOOO, and in the case of a continuing offence to a fine of £5OO for every day on which the offence is committed or continued.

Offences against the import control regulations will be regarded as offences against the Customs Acts, and persons committing such offences will be liable accordingly.

INTERNAL LOAN

MR SAVAGE TO BROADCAST. “One other point of importance,” said Mr Nash, “is that within a reasonable time after the necessary arrangements have been made the Government proposes to issue an internal loan to meet capital expenditure in connection with railways and electrical equipment and other public works. “The Prime Minister will speak over the national stations at 7.10 o’clock tonight, and will elaborate the policy of the Government.”

CHOICE OF POLICIES

MR HAMILTON’S COMMENT. (By Telegraph—Press Association.) INVERCARGILL, December 6. “To all those observant of the position for the last few months some such action was inevitable,” said the Leader of the Opposition, Mr Hamilton, in commenting tonight on the new import regulations. “The Government’s high internal costs policy coupled with its lavish public works spending, was bound to bring about conditions that would compel such drastic action.

“The Government had three courses open to it: (1) To raise the exchange rate; (2) to increase the tariff; and (3) to ration imports and licence exports. “The Government has chosen the third. Perhaps this action suits its book. It will give the Government more power and greater control over the wealth and trade of our country. People will soon realise the drastic and far-reaching nature of this action. It is not easy, however, to comment definitely till one sees the full text of the nature and extent of the power taken and, the method of administration.”

EXCHANGE ON LONDON

NOT TO BE AFFECTED. WELLINGTON, This Day. Inquiries in official quarters this morning elicited the information that the London rate is not to be affected by the provisions shown in the “Gazette” issued yesterday.