The Press MONDAY, JULY 17, 1933. The Quota Puzzle.

Press, Volume LXIX, Issue 20909, 17 July 1933, Page 8

The Press MONDAY, JULY 17, 1933. The Quota Puzzle.

For New Zealand the World Economic Conference has been more i than a disappointment; it has been \ a cruel irony. As a country with the highest per caput volume r < f trade in the world, she would r- . :a benefited more than any other, !< id | the conference succeeded in abating economic nationalism. But as it turns out, the delegation sent to work for this end has been compelled to discuss proposals to icstrict further the volume of Now Zealand's exports. It is a bitter and anxious moment; and producers' representatives can harnly be blamed for protesting in language that is at times almost hysterical. Yet, perhaps more than at any other time in the history of the country, cool and realistic thinking is necessary. If the Government and the producers are wise they will cease struggling blindly and noisily against the inevitable and set about making the best of a dangerous situation. To swim against the tide is merely to choose the quickest way of drowning. " Quotas," said the British Minister for Agriculture two months ago, "have come to stay"; and nothing has happened since to justify the hope that he was wrong. On the contrary, there is evidence that the British public as a whole has accepted and approved the principle of rationing imports. That being so, producers' representatives can save themselves the cost of further cabling to tell the Prime Minister that " the existence " of the Dominion's primary indus- " try depends on free entry to the " markets of the United Kingdom." The statement is not exactly true, and it will not help matters. Given the fact, which is beyond dispute, that the British meat and butter markets are glutted, it is possible that unrestricted competition would leave the New Zealand producers ( much worse off than a quota system—even a quota system which reduced New Zealand's volume of exports. The recent slump in but-, ter prices ought to have shown dairy farmers that restricted markets are not the greatest evil they have to fear. Farmers' organisations should also abandon the idea, which has already led them into a pointless quarrel with manufacturing interests, that the British quota system is a retaliation against the New Zealand tariff on British imports and can be bought off by tariff reductions. There is no reason to believe that the British Government has sunk to the pettiest tactics of commercial warfare and still less reason to believe that, if the New Zealand tariff were lowered, it would be induced to depart from the course it has chosen. Moreover, if the Tariff Commission's recommendations accord with its terms of reference, and if the New Zealand Government acts as advised, British manufacturers will have no grievance against this country.

The wise course for New Zealand and for the other Dominions is, not to attack the quota system as such, but to try to prevent its misuse. If the system is designed merely to ensure more orderly marketing and to assist in stabilising prices, then it may do more good than harm. Iff however, it is designed to raise prices by restricting supply it can only be mischievous. Unfortunately there is reason to suppose that the British Government is adopting the quota system without any attempt to increase the purchasing power of the British people. Its abrupt refusal to participate in an international scheme to increase public works expenditure, the temporary agreement to support the French franc, and Mr Montagu Norman's return to favour all suggest that the Treasury is regaining its old love of deflation. The time has come to remind Mr Neville Chamberlain of his very explicit statement at the Ottawa Conference that the goal of British monetary policy was the raising of sterling and, if possible, of gold prices. A policy of quotas plus deflation means the final frustration of the hopes aroused at Ottawa; and it will mean, for some Dominions, unwilling recourse to import restrictions and perhaps in the lon£ run inability to carry on the serv/ce of external debts. It is difficult to believe, however, that the British Government has deliberately embarked on a course which will be as harmful to British consumers as to Dominion producers.