The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo. TUESDAY, APRIL 18, 1922. THE TRADE OUTLOOK.

Auckland Star, Volume LIII, Issue 91, 18 April 1922, Page 4

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo.

TUESDAY, APRIL 18, 1922. THE TRADE OUTLOOK.

■ i m ■ ■ For the cause that lacks uiulmm, For the wrong that needs resist amss, Far the future in the distance, ■And tho good that tea eon ma.

The further drop in the English bank rate, the cheerful tone of the fortnightly review of the London markets, and tbe export returns for March, which were published yesterday, direct attention to the condition 'of British trade and the prospects of a revival. Tbe subject is of vital interest to New Zealand, for we depend on Britain more than on any other country for the sale of our produce, and prosperity and depression in Britain react inevitably on conditions here. Britain's trade returns for the last few months are encouraging. Imports. Exports. £ £ December 85,312,000 50,375,000 January 70,488,000 63,146,000 February 60,-38,000 58,335,000 March 87,870,000 64,680,000 The value of exports is now about where it was a year ago. For the first half of 1921 export values declined very sharply, and reached the lowest point, £38,000,-00, in June; then they began to rise, and reached their highest point for the year in November. Last month, however, they were substantially higher than in November. It must be borne in mind that values are an imperfect method of measuring either exports or imports. During ' the past twelve months there has been a pronounced shrinkage in the values of British exports, so that these figures are really more favourable as an index to prosperity than they appear to be. There is therefore some reason to expect a revival of trade. Unfortunately labour troubles hang like a cloud over the whole industrial landscape. The engineering dispute is still unsettled, and there is a cotton dispute of huge proportions. The prospects of a revival depend upon the success with which the more than usually difficult relations between Capital and Labour are adjusted, the outcome of the Genoa Conference, and the extent to which taxation is reduced. It is significant that this week's review should say that all that is wanted now is "reduction of the income tax." The industrial and business world has been clamouring for 3uch relief for some time; we wonder what it would say if it had to carry on under the New Zealand system.

The reduction of the bank rate is reported to be hailed with satisfaction in trade circles as proof that the period Of dear money ie over, and a consequent revival of trade is expected. Industry needs an abundant supply of reasonably cheap, money for its expansion. Both in England and in New Zealand it has been handicapped in this effort to expand by dear money and heavy taxation. Cheap money alone, however, will not produce industrial prosperity. There must bo

confidence in the ability- of markets to absorb goods, and it has yet to be shown that this confidence exists in Britain. The great rush that set in some weeks ago for gilt-edged securities, and is still going on, was a proof that there was plenty of money awaiting investment, hut that investors preferred the safety of Government stock or established industrial concerns to the risk of new enterprise,. But if there is to be a trade revival holders of money must be prepared to take this risk. Industry requires to be continually watered with streams of new capital, and if holders prefer safety to risk it will suffer. Cheaper money is an attractive condition. To the New Zealand Government and local bodies, which have been borrowing at high rates, it must come as a boon. Auckland paid 0_ per cent in London for a loan of £500,000, at par, and 6 per cent for £400/100 at 04, but Wellington has now floated a loan of £683,000 at 5_ per cent and 98. The saving to New Zealand in interest on loans floated during the next year or two will be substantial. The danger will be that cheaper money may encourage extravagance in public works, which has cost us dearly in the past. It will be Interesting to see how soon and to what extent the reduction in money rates in .England reacts on the local market. New Zealand rates never followed English rates to their highest point, and they may not follow them to their lowest. There is nothing in the Dominion banking returns to foreshadow a reduction in local rates, but the movement in Britain shpuld make itself felt here before long. New Zealanders should remember, however, that cheap money is not an unmixed blessing. They are dependent on the prosperity of Britain, and it would be better for that prosperity if there were less demand for gilt-edged securities, and a greater disposition to invest monej in new industrial enterprises.