The Financial and Economic Outlook.

Press, Volume LVI, Issue 17015, 11 December 1920, Page 8

The Financial and Economic Outlook.

According to custorii, the cTfairman of the Bank of New Zealand, Mr Harold Beauchamp, devoted his half-year!y address, delivered at the meeting of shareholders in "Wellington yesterday, to a survey of the financial and economic situation. 4 Such a survey is of far more than ordinary interest just now, when the whole business community is either feeling the effect of financial stringency or thinking anxiously upon what t7ie future may hold. Hitherto, as Mr Beauchamp points out, exchange between New Zealand and Great. Britain lias been very stable and notably free from fluctuations. Recently, however, importers in New Zealand and persons* wishing to remit money to London havo found it difficult and expensive to "uo theJr business. The cause lie?, of course, in the remarkable turnover of the trade situation—a strong balance of trade in our favour having converted into a large adverse balar.ee. The trade figures tell the story quite plainly. In the first nine months of 1919, tho exports from New Zealand to Britain exceeded the imports from Britain by over IS. millions sterling. In tho first nine months of the current year the imports exceeded the exports Vy- 8 millions. This is a change of 26 millions against us, and the balance has been increased for tho ten months ended October 31st last. By the end of tho year the change will probably be more. This is very uncomfortable state of affairs, and Mr Beauchamp does well to emphasise the fact that no remedy of a special kind is available TEe shortage of credit at Home anci the high price of money will not allow of tho raising of loan 3 large enough to ease the situation: gold movements cannot help us; and there is no relief to be found in soiling securities. There is nothing for it but to lessen our imports and increase our exports. Mr Beaui champ recurs again and again fo the necessity for reducing our demand for supplies from abroad. "The principal " relief, so far as exclTango is " concerned," he says, "will have tc " come from a reduction of imports— "especially the cessation of the-*rm-

" ports of costly luxuries. Unless tljere "is a great reduction in the value of " goods brought from abroad, tho pre- " sent difficulty with regard to exchange "is not likely to pass.*' And, more generally, "it is imperative, to pre- •' serve our financial equilibrium, that " we should stimulate production, ex- " panel exports by every means in our '• nov.-er. and curtail imports. The'need " for increasing the volume of our c-x- ---" ports becomes more urgent in view " of the substantial dceline in value of | '•most; of our primary products." j So far as imports arc concerned, sheer necessity "ill enforce the required contraction. It will be easier to curtail imports than to securc better returns from our export*trade. The outlook for wool is very uncertain. The available* .supply is in cxc-ess of the demand, and Mr Bcauchamp clearly is of opinion that wo must not expect any early improvement. l>emanil, tie think?, can be stimulated in any case only by the encouragement of low prices. He anticipates t'no -worst —in tho shape of u forbidding tnriflr—from the now solidly Republican Administration in America, and tho only ray of hope he sees its. in j poverty-stricken Europe. But a European marker means low terms and long credits. He does not say so, but ivo assume that Mr Beauehamp thinks that sales on such terms as can be got will bo preferable to holding for an improvement. Tho Government's guarantee will help growers to do this, but any general resort to this policy will make heavy demands on the already reduced volume of credit available. The demand for credit is exceptionally high, and everything points to a continued r.iso in the price of money. Tho whole situation may he summed up briefly enough: the country has been living beyond its means and sws made no provision against the unwelcomo fall "in export vnlues. The way.back to easier conditions is tho way that the individual must follow who finds himself in a like case. Ho must spend loss and earn more.