The Press THURSDAY, DECEMBER 8, 1938. Policy or Expedient?

Press, Volume LXXIV, Issue 22579, 8 December 1938, Page 10

The Press THURSDAY, DECEMBER 8, 1938. Policy or Expedient?

It is perhaps a pity the Prime Minister did not leave the task of explaining and justifying the Government’s exchange and trade control measures to the Minister for Finance. Mr Nash’s statement has the merit of clarity and precision; it leaves little room for misunderstanding and contains no irrelevancies. The only effect of the Prime Minister’s utterances on the subject, with their vague metaphors and their inconsequent moralisings, is to raise unnecessary doubts. Moreover, on one point the Prime Minister and the Minister for Finance seem to have very different opinions. According to Mr Nash

the purpose of the regulations and 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 payment for essential imports is fully provided for. The necessity is due to the continued decline of our London funds, because of over-importation, particularly during the last two years, accentuated by capital transfers during the last year.

The Prime Minister, however, laboriously and discursively contradicts Mr Nash’s statement that the regulations are the result of a shortage of London funds.

This [he says] has not been an overnight thought. ... It is a policy to meet the growing tendency the world over. We- are going ahead with a policy we thought out years ago. The time has come for conscious development. Unless you have some sort of control over overseas trade, you allow a laissez faire policy to operate and you will fall down on the job.

Not only is this in conflict with Mr Nash’s version of what has occurred, but it conflicts with what the Prime Minister himself has said on another occasion. In July of this year several London newspapers predicted that the Government would adopt a policy of exchange control. This is a quotation from an interview which Mr Savage gave to the parliamentary correspondent of “The Press”:—-

The Prime Minister said that policy which provided for the open sale of sterling by the Reserve Bank at a standard rate had not been changed and that there had never been any suggestion of a change of policy or an embargo on the purchase of sterling funds.

Thus, in July the Prime Minister is protesting that there has “ never been any suggestion ” of exchange control; and five months later he is proclaiming wisely that plans for exchange control were laid “ years ago.” The truth is that he is being wise after the event. Exchange control was certainly contemplated by the Government in its first year of office, when an attempt was made to conclude a trade agreement with Great Britain on the basis of a blocking of New Zealand export credits for the pin-chase of British goods.. The proposal was flatly rejected by the British Government and from that time to the present exchange control as a part of Labour’s programme has not been heard of. The Prime Minister was probably sincere and accurate in July when he denied that exchange control was contemplated. The measures which have now been adopted have their origin ih the pressure of events and not in any carefully-prepared scheme. Nor is it true that they are necessary to meet “the growing “tendency the world oyer.” They have been made necessary by purely domestic circumstances. Exchange control is necessary to overcome a temporary shortage of London funds; but if the Government imagines it will bring increased ''prosperity, or improve New Zealand’s trade relations, it will very soon discover its mistake.