"Wild” Exchange In The Pacific
Some of Maddening Problems Faced
by Pacific Traders
The exchange position in the Pacific Islands is in a chaotic con dition. Firms trading out of Australian ports to the various Islands Territories are faced with problems of the most complex and irritating character.
The position changes every day and, because financial adven turers are watching developments eagerly, with a view to seizing chance profits, the managers of the big trading companies must exercise keen and unceasing vigilance.
Messrs Burns, Philp & Co., for instance, through their different Islands branches are compelled to trade in the currencies of Australia, England.
New Zealand, France, Solomon Islands Fiji and Tonga. When the Australian exchange catapulted, the relationship of all the other exchanges, one to an other, began to shift about, until the position has become confusing beyond description.
To give some idea of the difficulties with which the “wild” exchange has surrounded South Seas trading, we have compiled the following summary:
New Guinea And Papua.
As these Australian territories use Australian currency, they have the same rate of exchange, in international trade, as Australia. Consequently, the producers there are now, equally with Australian producers, finding the over seas markets good and profitable; al though it is correspondingly difficult to purchase foods from overseas.
Solomon Islands.
The position here is confused. The Administration issues a £1 note, which apparently is reckoned on a par with English currency values. But, because there is no regular bank in the protec torate, and money transfer facilities are provided by Australian trading in stitutions, the S.I. £1 note is actually kept on a par with the Australian £1 note. There is much English silver in the Group and, naturally, because 20 English shillings are worth nearly 26 Australian shillings in international ex change, there is much eagerness to expert this English currency. But the S.I. authorities have placed a strict embargo on its removal from the ter ritory; and, for trading purposes, no difference is recognised between Eng lish silver and Australian silver, of which a great deal also circulates in the Group. Therefore, so far as in ternational trade is concerned, the Solomon Islands exchange is the same as that of Australia; and S I. producers should be enjoying the same advant ages in regard to overseas sales of their products.
New Hebrides.
The position here is one of great con fusion and difficulty. There are circu lating in the Condominium, as media of exchange, English silver, French notes and silver, and Australian notes and silver. There are practically no facilities for the transfer of credit be tween Australia and New Hebrides. The Bank of Indo-Chine operates in New Caledonia, and its agent in Sydney is the Comptoir Nationale; and it is pos sible to transfer money through these two establishments to Noumea, whence it is sent in bank notes, by post, to New Hebrides. Messrs. Burns, Philp (South Seas) and Co. Ltd., who trade in New Hebrides, provide some transfer accommodation, by drafts issued in New Hebrides on the head office in Sydney —but, outside of their domestic trad ing requirements, these facilities are extremely limited.
Because of the confusing mixture of currency, the lack of means of trans ferring credit to Australia (with which so much trade is done), and the uncer tainty regarding Australian currency values, it seems essential that some thing should be done at an early date to regularise the position in New Heb rides. It is highly important, from Australia’s viewpoint, that the problem be faced, so that Australia can take advantage of the present exchange position to sell her goods in this small, but eager and profitable market. We understand that, in this regard, cer tain pronosals already have been placed before the Condominium authorities.
Fiji, Tonga And Samoa.
There is confusion here, also, because there circulate in these Groups the Fijian paper £, the Tongan paper £ (both nominally on a par with the Eng lish £), Australian notes, New Zealand notes, and English and Australian sil ver. The Australian currency, of course, is seriously depreciated; the New Zea land notes slightly depreciated—and one would need the mental agility of a Gippo money-changer to discover the correct relationship of one to the other, and of both to the domestic paper money.
In Samoa, the position is less con fusing, because the Territory has most ly N.Z. currency (the notes of the N.Z. trading banks, and English silver), and the Bank of New Zealand operates freely there.
Many people, of course, are trying to get English silver away from these Territories, in order to avoid the high exchange rates; but the Governments are placing a strict embargo upon its removal.
Trading Conditions.
The export position, therefore is that the producers of New Guinea and Papua, because they employ Australian currency, and of the Solomons, because
of the curious combination of circum stances, are getting the benefit of the Australian exchange. If they sell their copra, for instance, at the English price of £14/7/6, they receive well over £18 in Australian money (each English £ being now worth 25/9 Australian).
Or, to put it another way, they can sell their copra as low as, say, £12 Eng lish, knowing that that is equal to £15 Australian. But, if they are going to retain that exchange benefit, they can not buy goods from abroad. They must buy Australian goods. Payment for £1 worth of English goods requires 25/9 Australian.
But the producers of Fiji, Tonga, Samoa and, to some extent, the New Hebrides, are working on a currency that is much closer to English currency values and, so far as export is concern ed, they are not getting such marked benefits from exchange. Their ex change, for all that, is at a discount of around 10 per cent., which appreci ably helps their selling activities, but makes it difficult for them to buy from Europe or America. But the exchange position between those Territories and Australia ought to make it extraordin arily easy for them to buy from Aus tralia. Apparently, they need only put up about £85 English to purchase a credit of £100 Australian.
Exchange Quotations.
The following exchange quotations gathered in Sydney, may be of use to our readers:
Fiji—Through Bank Of N.S.W.
Australia on Fiji, on the basis of £100 Fiji—buying, par; selling, £117/10/-, with concessions to £ 105, for genuine trade tran sactions.
Fiji, on London, basis of £100 London:
Western Samoa—Through
Bank Of N.Z.
Exchange Australia, on Western Samoa, basis £100 Samoa —selling, £117/10/-; buying, par. With concession rate of £105 for genuine export trade. Samoa on Australia— selling, par; buying, £117/10/-.
Exchange, Samoa on London, basis £100 in London:
New Guinea And Papua
Through Commonwealth
Bank.
From Australia, on Rabaul and Salamoa, £1 per cent.
From Rabaul on London, same as Australia on London —30 ½ per cent.
Through Bank Of N.S.W.
Australia, on Papua and New Guinea: £1 per cent, premium each way, equivalent to commission of £1 per cent.
Papua and New Guinea, on London: Same as Australia on London, and vice versa.
Post Office Orders.
The following are the rates for transfer of money between Sydney and Pacific Groups through the General Post Office. All such transfers are limited in amount: Papua, Mandated Territory of New Guinea, Fiji, New Caledonia —rate, 3d. for each £ or fraction, with minimum charge of 6d.; re mittances strictly restricted to small amounts for business purposes, at absolute discretion of post office authorities.
Norfolk Island—6d. for £5 or fraction; no restriction: same as Interstate.
Solomon Islands; Gilbert and Ellice Islands: Tonga.—No actual restriction, but an implied one; rate, 4d. for each £ or fraction, for first £6; and 3d. for each additional £, with minimum charge of 9d. Post office orders issued at discretion of post office authorities.
New Hebrides and Tahiti. —No money order issue through post office.
Western Samoa and Cook Island. —Small amounts can be transferred by Australian Post Office through New Zealand Post Office; but issue strictly limited, at discretion of post office authorities.
Buying
Telegraphic transfer £110 0 0 Selling £111 2 6 110 7 P 30 days 108 18 9 110 12 6 60 days 108 11 3 110 7 6 Fiji, on New Zealand, basis of £ 100, New
Zealand—buying, £99; selling, £101.
Buying
Selling
Telegraphic transfer
On demand £111 7 6 112 7 6 £109 2 6
30 days
110 17 6 108 13 9
60 days
110 12 6 108 6 3
90 days
110 7 6 107 18 9
120 days
110 2 6 107 11 3