The Auckland Star WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun. FRIDAY, JUNE 2,1939. MR. NASH'S TASKS.

Auckland Star, Volume LXX, Issue 128, 2 June 1939, Page 6

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

FRIDAY, JUNE 2,1939. MR. NASH'S TASKS.

For the cnuxe. that Inrkx assistance, For the irronq thnt needs resistance, For the future in the distance. And the good that we can do.

(>ni. ni , the principal purpose- oJ.' , Mr. Nii.-h'-, presence in London i> to arrange lor I lie renew ill, mi the best terms lie can get, nl , I<•;111 ~ idtalluiL' Al 17,17i!,l!)l. made In Mew Zealand between lhSil at) 11 l!lll». Jn ntiriu;il cireum-tance-. this would not bo difficult. In -iit-h ,i i-H.-e the lender usually does not want fill In- capital buck, though hi , likes tn feel that lie i-nulrl have it buck if lie wanted it. -V- tn the rate of. intei/est tit whirli lie will re-lend, t hat will be determined partl.v b\ lu~ knowledge nf the rate which wiiiild be available In him it he ch'.-c tn in\c-i hi- iit<t rif ■ \ in nthi'i , -iiiiiliir -ecui'iiie-, and parllv b\ hi- kimw Icdffc i>l whet her m , ii"l the lini'rnwei , '- cirriini.-tance.- have changed. Thi- hitter i-un.-ideratitMi is tin. , iinpoi'tnnl one at the pre.-ent time. The t-imiin.-tiinees of New Zealand. regarded n- u borrower, obviously have I'hanifC'd. They have idianjred many time.since the .CI 7,1)011,001) was Jent. and the mat kfl'.-i valuation of. the security has tliictuatcd The most adver.-e cha nife was tlurinjr the tiepi-ession year.-, when the Dominion's earning j»owev was reduced Ijy low produce prices. Over three time- as much wool, or twice as much butter, had to be exported in l!)3'J-;si> as was exported in If)"-!!) in order d> pay interest on tlie public debt. If the Government of the day had had to renew -i £]7,000,000 loan in the Inter years it might have found the task impossible, or possible only by paving ii very hi#h price. As it was, great sacrifices were made in order that the Dominion should be able to pay even its interest on the due dates. That difficulty, clearly traceable to low prices was overcome.

PRESENT AND FUTURE

Sincp then export prices have been relatively high, and yet at this moment the Dominion's sterlinp; funds ore very low, so that extraordinary measures have had to be taken to restrict the amount of private expenditure abroad. Any borrower would be bound to consider, h'rst, what circumstances have brought about this condition, and, secondly, whether those circuniKtnnces nre likely to continue. Such questions, it is obvious, are bointr a.-ked in London now, nnd it is Mr. Na-h's task to answer them, not only to his own satisfaction, but to the lender's.

The circumstances which have thrown doubt on New Zealand'* credit worthiness are not in doubt. They are the direct and indirect consequences of the policy of the Government. Yet it should not be forgotten that while pursuing its policy the Government has met all its debt commitments, and that its leaders have on every occasion expressed the will and th-o determination to go on doing so. Mr. Xash's first action in London was to reiterate that determination, which is of course supported by the fact that individual New Zealanders' requirements in sterling funds are being refused or reduced for the specific immediate purpose of enabling the Government to meet its commitments. There does not appear any strong reason to suppose that commitments in the future will not be met regularly and in full, unless there should recur a long period of.' low prices, the effect of which of course would be intensified if our United Kingdom markets were restricted. Mr. Xash'.s task is to allay doubts as to the future willingness and capacity of New Zealand to meet its commitments. TRADE RESTRICTIONS. But Mr. Nash has another task, not dissociated from the first. Partly as a consequence of the Government's internal policy, restrictions have been placed on New Zealanders , buying in the United Kingdom. Manufacturers there are naturally asking what the future holds for them. On this question it is exceedingly difficult, even here in New Zealand, to form definite opinions. If it were possible for Mr. Nash to give assurances that the existing restrictions are due solely to the depletion of sterling funds and will be removed when the funds are built up, his task would be relatively easy. British exporters are accustomed to such difficulties. But while Mr. Nash is, in London, offering to " spend the maximum of the balances available in Britain," Mr. Savage, in Christchurch, is giving assurances to manufacturers that the local market, which the Government is encouraging them to capture now (under the protection afforded by the import restrictions), will be held for them in the future. Perhaps those statements can be reconciled. It mav be

that what the United Kingdom loses in exports of finished goods it will gain in exports of raw materials and equipment for New Zealand industries. If this could bo demonstrated Mr. Nash would not quell the hostility of individual exporters, but, he might nllay the doubts of the British Government, which, presumably, is concerned mainly with the total of New Zealand's purchases and not with their character. But if Mr. Nash should fail in this demonstration the effect might be to ptrnnsthcn the hnnd of the British Minister of Asriculturo if ho attempts to limit the Dominions' market in tho United Kingdom. In that event New Zealand's future capacity (nnd, conceivably, its willingness) to pay might really appear doubtful.