RESTORATION OF CONFIDENCE.

Press, Volume LXVIII, Issue 20623, 12 August 1932, Page 11

RESTORATION OF CONFIDENCE.

ESSENTIAL TO ECONOMIC ADJUSTMENT.

PART PLAYED BY WORLD CONFERENCES.

"Empire and world conferences are essential nowadays to the adjustment of financial and economic abnormalities and the smooth running of the machinery of industry and commerce, but unless this machinery is firmly bedded in national and individual sanity and economic wisdom, such conferences are bound to prove abortive for the restoration of that confidence which is the hinge-pin of industrial stability," declared his Excellency the Governor-General, Lord Bledisloe, in an address to the Christchurch branch of the Eoyal Empire Society yesterday.

"Lack of confidence is the reason why capital, which should be employed in reproductive, labour-employing industry, is being drawn towards stagnant unproductive investment or deposited to excess of requirements in various types of banks," said his Excellency. "The same reason prevents or retards customary non-extravagant expenditure upon ordinary commodities, when such expenditure is imperatively needed, and may indeed be a good investment in saving the spender part of the heavy cost of unemployment arising out of the slackness of trade. Currency Problems. "This lack of confidence may be engendered in different countries by many causes, including fear of war, high tariffs, Government competition with legitimate private enterprise, sudden fluctuation in money values, scarcity of the medium of commodity exchange, and industrial strife. Over several of these factors we have individually but little control, while others can be moulded a» our iudgment and vision dictate. "Take for instance the problem of currency as affecting' international commodity exchange, upon which Ottawa, if it eventuates in no other universal benefit, seems likely to initiate a saner policy, such as, it may be hoped, will subsequently be endorsed at the forthcoming world economic conference. Apart from shipping and other services and interest on investments, a country's exports can only be paid for by its imports. If this balance is not maintained the whole system of international trade is thrown out of gear and a creditor nation possessed of a large portion of a depicted currency can insist on payment of her debts on a higher scale than was originally intended. It is sometimes forgotten that although Britain and some other nations have abandoned the gold standard, world commodity prices are still anchored to gold and influenced by its scarcity.

Promise of Prosperity. "Subject to a readjustment of world currency and a reasonable measure of preference in British markets the trade prospects for overseas British possessions are by no means unfavourable; In no less than 24 commodities record imports into Britain from such territories were reached in 1931, and in respect of many of them the increased turnover has more than made good the loss consequent on their reduced value. "Over-production is often paraded as an alarming bogey before the primary producer, but there is little or no over-production for primary products of the highest quality. With a return of purchasing power on the part of the masses of the world, duo attention to the invaluable teachings of modern science, the tightening up of official grading at our ports, and the consequent greater uniformity of quality, and with more systematic marketing, there is. in my judgment, no country in the world, despite its vast distance from its chief market, which holds out greater promise of future prosperity than this Dominion. It is, however, a new country, with its immense natural resources in only the first stages of their development, and with a wholly inadequate population. Any attempt on its part to emulate in its public expenditure, whether national or municipal, the achievements of older, more highly developed, and more populous countries is bound to end in national impoverishment and bankruptcy. Such expenditure involves a cruel burden, in the form of interest on external loans, upon the nascent industries of countries, which is bound, if perpetuated, to stifle their development and deprive the working population of their rightful employment. Consequences of Ottawa. "It is sometimes suggested that such help as the Ottawa Conference is able to afford to the British farmer is calculated to outweigh the value of fiscal preferences contemplated for Dominion primary producers. There need, however, be no apprehension on this score. In recent years Britain has raised 39 per cent, of her essential foods on her own soil, and has obtained a further 39 per cent, from foreign countries, and 22 per cent, only from the overseas Empire, as compared with 19 per cent, before the war. "The economic condition of British primary producers is worse to-day-than that of those in New Zealand, and thousands of the British farmers are at present on the verge of bankruptcy. Such impetus to their activities as Ottawa may provide is calculated to save them from insolvency rather than to increase their output, which, with the growth of population and encroachment of the great cities, is never likely to exceed 50 per cent, at the most of British requirements, leaving a big margin for Empire supply. This margin is now largely derived, not from countries like Argentina, which afford Britain reciprocity of trade, but from countries which, while flooding her markets, are providing little or no employment for her. great factory populations by purchasing their output. Co-ordination Wanted. "Let us, however, while striving to extend Empire trade, be careful to avoid exclusive economic nationalism. Ottawa may tell its tale, but so must Lausanne and Geneva. If one member of the fraternity of nations suffers, all the members are bound to suffer with it. If, for instance, Germany or the Danubian States are threatened with bankruptcy the progress and prosperity of the British Empire will be arrested for at least a quarter of a century. The crying need of the world to-day would appear to be co-ordihation of currency policy, first within the Empire, and afterwards within the world. Let us in no speculative spirit but by combined constructive effort,* with full play for individual enterprise Tather than that of grandmotherly departmentalism, develop fullv the land of our country and such ancillary industries as are capable of maintaining their economic vitality without becoming a burden upon the community, winning from both sources the largest possible amount of wealth. Interdependence of Nations. "Nothing could have afforded plainer evidence of the true source of the prevalent malaise or stronger evidence of the ecoaomis iatexdepeodeae* of

nations than the immediate effeet of thd result of the British conversion loan and of the Lausarne Conference upon, the price of New Zealand wool and dairy products," said the Govern©** General.

"Never before has the world beeni faced with problems of such gigantic magnitude or intricacy, due partly to? world impoverishment caused by the war and partly to deliberate and short* sighted human interference. with freedom of commodity exchange and non-« availability of its hitherto recognised medium —money. It is right that the British Empire snould lead the world ia the solution of world problems and that? the Motherland should lead the Empire. The question is will the Empire follow?. "Never was there more need than there is to-day for wide vision, sound judgment, and a burning consciousness that the pursuit of national welfare, whatever sacrifices it entails, is the surest road to individual prosperity. There is no room to-day for insularity either individual or collective. All must pull their weight in the national boat if she is to cross the present troubled waters to the haven of prosperity, which is even now visible on the horizon. Little sympathy should -be shown for the myopic, self-centred idlers who sit in the boat, but instead of helping it along, criticise the oarsmen, and still less for those, if there be any, who try to sow dissension among the would-be patriots for their own selfish ends."