BANKING COMMISSION.

Waikato Times, Volume 119, Issue 19901, 2 June 1936, Page 3

BANKING COMMISSION.

SPECULATION IN EXCHANGE. LIKE TRADING WITH ENEMY. I - I A FLEXIBLE RATE ADVOCATED. | t'nlted Press Assn.—Flop. tpl. Copyright SYDNEY. .Tune I. During the examination of Mr A. C. ! Davidson, general manager of the j j Bank of New South Wales, before the I Royal Commission on Banking, lie was asked for his opinion on speculation with exchange. He said he did not; think it should be forbidden, because 1 there was no speculation worth while ! mentioning in ordinary times. Mr Justice Napier/ chairman of the | commission, interjected: “I cannot j help thinking that speculation with j | exchange is almost on a par with trad- j Ing with the enemy in war time, as an • act inconsistent with the best interests of the country.” Mr Davidson replied: “In the exchange market speculation never moves except within the limits fixed by the central bank, and in that way speculation can be controlled. I am not afraid of speculation in exchange.” Mr Davidson later added that he could not emphasise too strongly the case for a flexible exchange rate which, through small but frequent changes, would give the required lead to small internal adjustments as became necessary, in its management of exchantfcs the central bank could not disregard Government policy and capital movements. The central bank should cooperate with the Government aird trading banks and seek a constant adjustment in the exchange policy to the conditions created by legislative and administrative acts.