"ENCOURAGING."

Auckland Star, Volume LXIV, Issue 253, 26 October 1933, Page 5

"ENCOURAGING."

TRADE PROSPECTS.

GOVERNMENT CRITICISED.

RESERVE BANK PROPOSAL.

(By Telegraph.—Own Correspondent.) WANGANUI, this day. "The conference meets tliis year with distinctly encouraging trade prospects in evidence in Great Britain, and the trade improvement which has taken place clearly indicates that recovery is under way," said Mr. A. S. Burgess, president of the Associated Chambers of Commerce, at the opening of the annual conference this morning.

"During the past few weeks reports of improvement in almost every branch of trade, and less unemployment in England, have come to us, and it can be accepted that prospects are steadily brightening. This, to' us in New Zealand, is very heartening, as it is only through improvements overseas that we can expect any lifting of prices of our primary produce, on which our prosperity depends" he said.

The position of Great Britain was particularly gratifying, because the British Government had followed a sane and sound economic policy amid widespread radicalism, not excluding the American nation and the tremendous uncertainties that attended that country's experiment in State-controlled industry. Whatever might be the result of that experiment —and at present there appeared to be grave doubts as to the result —Britain's policy stood out as a bulwark of proven soundness in a world of perplexity.

Tlie proposals that have 'been made with regard to the imposition of quotas on the meat and dairy produce of New Zealand were very disquieting, and if brought into effect would be a disastrous thing for the country. There was no doubt that the conditions brought about by the action of the Government in increasing the rate of exchange, while it might not have been responsible for the origination of the proposals for quotas on dairy produce, had been a contributing factor in the British farmers getting together for the purpose of guarding their own interests in view of the advantage gained by New Zealand producers in the 3ritish market through the depreciation 'of New Zealand currency. Higher Exchange Rate. The Associated Chambers of Commerce, said Mr. Burgess, had fought "interference by the Government with the rate of exchange because that action had been an interference with economic laws and had not been in the best interests of the whole of the people. The endorsement by the House of Representatives of Government policy in that matter was not, in that case, a true reflection of the opinion of the country, and it. was quite evident that the primary producers themselves were ribt by any means "nanimous. Evidence of the dislocation of trade was still manifest in the figures covering imports.

"New Zealand wants to secure a free and unrestricted market for her produce in Great Britain. This is an imperative necessity, and we should take every step possible in this direction by bringing our exchange back to normal and reducing tariffs. The Government should be ptessed to give this matter the most serious and errly consideration.

"We are heading by design for an tinbalanced Budget—what has been conveniently described as a 'permissible deficit,' " declared Mr. Burgess. "Our reserves are exhausted. The only reserve left is the taxable capacity of the people, and this has got to breaking point. The powers of wealth production by the people, from which source Government revenue is obtained, are hampered on many sides by restraints imposed by the Government on private enterprise; we have a mounting general and local government debt, and a gruelling tax and rate burden. As a business Budget, the national accounts can be squared only by cutting down national expenditure or .by increasing the national income. The latter is by far the harder course, since New Zealand is so dependent on overseas market prices for her produce, and there are to-day more sellers than buyers. Pessimism is as inexcusable as undue optimism, and while wise spending is to be encouraged to the full and the return of confidenc3 is of inestimable value, it would be foolish to hoodwink ourselves into believing that there is not a great deal still to be done in national economy. "As for present-day tendencies in Government, there is no avoiding the fact that the State is assuming an increasingly greater measure of control in those matters that bear on our getting a living, and the freedom of the private individual is being progressively curtailed. It is a matter of vital concern that the wheels of industry and trade shall be enabled to revolve at maximum velocity, and ways to that end must be found. This is tile only solution to our unemployment trouble. Reserve Bank Bill. "When the recommendation was first made for the establishment of a Reserve Bank it was stressed very strongly that such a bank must be absolutely free from politieal control," said Mr. Burgess, referring to the Reserve Bank proposal. "Now, what do we 'find? In the bill before the House, of the ten directors, six, including the governor and deputygovernor, are Government nominees.

Originally it was recommended that advances to the Government should be limited to one-quarter of the estimated annual State revenues, and it is now proposed to increase it to one-half — that is just-double the amount recommended. Again, it was proposed that any profit made by the central bank from the taking over of the gold reserves was to be credited to the trading banks or be apportioned between those banks and the Reserve Bank. In the bill before the House this was altered so that any profit made is to go to the public account. It looks as if the Government is providing in this way for the huge loss involved from the high exchange rate, and this grab would be an easy way to liquidate this loss. Surely no sane person would attempt to say that a Reserve Bank a a now proposed would be free from political influence, and if it is not then considerably more harm may result than good."

In conclusion, Mr. Burgess said that the country was staggering under a burden of taxation which was almost at breaking point. One of the brightest spots on the horizon at the present moment was the relief being extended to the taxpayers by the Australian Government to the extent in a full year of something like seven million pounds. It was gestures of that kind that would help to restore confidence, and it was confidence that was required to restore the world.