EMPIRE TRADE TO-DAY

Press, Volume LXXI, Issue 21449, 15 April 1935, Page 12

EMPIRE TRADE TO-DAY

REVIEW BY BRITISH ECONOMIST NEW ZEALAND'S PROBLEMS ; s j | EFFECTS OF THE OTTAWA j agreements ''Ever since the war. though the primary industries of the oversea Dorrnions nave greatly increased their output, as sources of employment and as direct mean.; <A supporting a risinu I population they have been no more than stagnant. The slump has accentuated this tendency by driving many people from the country to the towns and often, back to the countries whence they had emigrated. One corollary is that the recovery of the Dominions is to be measured at least as much by the condition of their secondary industries and by the degree of urban unemployment as by the continued bankruptcy or renewed prosperity of their primary pn.ducers. In this light it will be seen that everyone of the Dominions has travelled well beyond the nadir of depression, in spite of the low prices sulf ruling for primary commodities, which w the most general circumstance that atTects them all." This statement is made in the monthly review for March of Lloyds Bank, Ltd., vtie the most authoritative of English commercial publications. by Ms PL V. Kodson. discussing Empire trade to-day. Mr Hudson states that the British Empire, as an economic group, is often thought of as a rim o- primary producing countries with an industrial hub. Such a description. however, might be very misleading; for although most trade within the Empire is an exchange of manufactures for raw produce, the Mother Country is far from havm.g a monopoly of secondary industry. It is well to remember such facJs a? thai the eross output of Australia's manufacturing industries ureatiy exceeds rh-u <A her primary industries, or that Canada, before the slump, was not only a considerable enporter of manufactures to Eneinnd out was on balance an international lender.

"Threat to Now ZeuUnd" "Nov/ Zealand, by contrast with Australia, has no/,;- sought salvation " by high arid -.vide protection tor 3 secondary indus-ries," he continues, » "It is the more rettreUabie. th-refer:. ' that she should be threatened iinre g vitally than any '.the:* country ot the Empire by the nohcy of protection by 1, restriction. Her staple exports are and lamb and dairy pr'tritieo "* j She has shared in the benefits ot" i higher prices i'cr w:-o! and tor mut- '!*•![; -;n the latter crsc :.v.rtm the . h.-u!t of die restinctinn m" snpmy hi; : rhe British market. But it is not at-! ,:ways t'ully realised what difficult 1 . problems are created by output-re-: i orietion for a '.•■'tintry mi suited '■' , - ■J alternative indi; Ones, problems that ■* are net by any means vlvod even i" - rest:;': is a large rise of _■ j ~ "Land, which i; probably mongaged, j . must m out of cultivation. rhnpleynnmf: must be found for the labour d:s- i '• placed. Railway- am! c'her services, | ! designed on the -opposition that pro- j - dtietioa would continue tn expand as j t" in the oast, become a toll en the ! 11 country instead ot art a soy. | , "New Zealand had. in fact, invested! far more in railways and ether uubiiej capital works than her immediate! prospects justified. As i.i Australia,! tne expenditure borrc-tved money on ; governmental works had become one; lot the ormelual industries of the coun- ' | try. Public retrenchment and 'he cos- » : sation of borrowing thtis threw out: ■ot work a large body ot' men unattached to snv private industry, and there:"ore_ imlikeiv to tind employment until industry \id not merely u-j ; tainod, but had surpassed the ere- : ! slump level of activity. This problem : '"i'i reman- wim New Zealand tori

i Tile ExvftaiJifi; Kate Mr Hodsoc states *hathe c;-.rh.u:-ie i value of the New Zealand pound v! s*.:?l si matter subitc controversy; '-'-5' Dominion. Uo to January, !X ! :J, i 't 1 v:' co 1 7 he <nys. Now -on-j | land maintained a 10 eer eon:. p-j:;i- ----. jitm: on <tcri;ne Under 'ins reeime. 1 the balance «;* payments provided ■ i a. mole sterling ''undj for debt service 1 };md other payrn due. Hence V.to: i depreciation o* thy currency vj f ! same level as the Australian pound I till ! j ver cent. ot' sterling, xto; be::::-; d:c- ; | tated by jxtcri* xl pressure, t:j i , have beer undertaker: er:!y as a: in-' j terra! of ••';;ns of internal re-! construction. "UnXortu»iau?l>. it was sectional in- i teres: that dorr*: a a ted the controversy j and largely decided the issue." he -tees ! on. "The Government had to xjay for i its policy not only in the added bur-' den of oversea '".teres?. but also in i*s undertaking to take over surplus s:er-. ling balances mom the bunks. Y!v< . ; meant a costiy outlay, ihou;;h of course : equivalent assets were acquired. The: establishment of the new Centra! Ke- | serve Bank or' New Zealand, which has > assumed both the acc.trrtu'ated funds; and Live undertakin.'i, thus apDreciubiv j b-utten.s the problem or ..joverr mental ;• tinance. It has also meant to: assurance of exchange stability. Until the centra! bank wti•< set up. the exchange rate was 'i.n Doitties,' and there could Oo no con:;dence that :t would remain fixed for any length oC time: one oil the first actions vi the governor of the bank was to «;ve on assuran.ee that the rate would remain, unchanged 'for a lei::.; period unless there should be a marked altera'.:.><> :.n existing eon.ditiens.' "The tenor and the details oil the i Commission's report < their terms of | reference having included the Ottawa ; formula oil 'equal competitive opporj Utility') were in favour of tower duties !on British goods. Unfortunately, the ; resultant amendments of the New Zealand tarilt v/ere less— largely by way Jof postponement—than had been recommended. The cuts actually made are nevertheless important. A certain, measure of internal relation is also to be expected in New Zealand, possibly by way of a turner programme of government expend:.:,are; and the eomoi- | nation of l.rn.s force with lower duties J should result, it: an expansion, of her : imnorts.'' 1 Diseu»sr.!{C Australia. Ml' Hedson j says that; this country's fundamental • oroblem during the depression was to • adjust h -r ecor.omy to the cessation of' oversea borrow iThis, ho considers, has been done successfully. "Nevertheless,'' he continues, ''Australia has many dhHeulties sliii to face. One is the tendency of interest rates to rise, while trie States are still necessitous borrowers. The budget troubles of '.he St:: f es intlame the constitutional problem, wrnch m its present form is to be reckoned practically an economic ohenomenon. Behind it lies the still more fundamental problem of low price:; for primary cok;nodities. Australian Opposition "Australian producers, and their political representatives, are stuc-i bvr'iiy opposed to the restricuoiJ of; exports or prod. a: r mn of primary con:- i

irrodttie:;. Ausir-.ina, ;hcy «ay. is per. • haps "he worki'.-s most esHcieut vre- ' * ; ducer oL agricultural and pustora. staple;; why, then. should she vulvn- j tariiv accept contraction in that role j as the dictate oi British protectionism'.' I So Aastrana is bending iter energies; to the search for now t'ore.gus markets. It is a hard task, but there is •; •' warning t'or us ii: the very eiTort. It . Australia makes special trade Serins I with ioregin countries. the concessions ; that she oifers are bound to make I some inroad into our own privileged >' position under the Australian tariff." ; In conclusion. Mr Hodson discusses: the working of the Ottawa agreements, < which, have, he says, on a broad interpretation or the available mrures. > worked more favourably towards the i Dominion thai: towards Great Britain. : "In sum, the trend or Dominion tariitg since Ottawa has been s!ow!y but perceptibly downward,''' he writes. "Mow much oil tins is due to the agreements themselves; how much to genera! eeon.omie improvement m "the dominions, which has allowed them to relax some or tho restraints im-' I posed uuriiK the er'sis: how much to ; shifts m pci:':eal opinion and power: : in then- eapnais, i- is impossible to i 'estimate. What is certain is ciiat there > is a better opporttm ;*y to-day than; there was two ar.d a halt; years' ago to j negotiate a real measure or liberation ! o;.' trade within the Commonwealth, j Freer trade .In United Kingdom manu- i factures, unrestricted entry or Empire j primary products into this market —• that would be the general plan oi' cam- j oaign. Tlie fundamental choice in •' Imperial trade policy can. be taken apart from ether issues of hseal policy —are we to aim -it the maximum freedom oi' trade within the uroup oi British countries; or even within the Commonwealth are we to put nationalism iirst. aiming only at regulating for mutual advantage the limited trade i that remains units severally ; determined to make themselves as [alias possible jcif-.italicie:HV'' !