TRADE POSITION

Dominion, Volume 31, Issue 253, 22 July 1938, Page 12

TRADE POSITION

Use Of Sterling

Balances

MR. SAVAGE’S DEFENCE

“Much Of Talk Deliberate Propaganda”

A defence, of New Zealand’s trading position and the use of the Dominion’s sterling balances was made by the Prime Minister, Rt. Hon. M. J. Savage, during his speech in the linancial De-bate-in the House of Representatives last night. Much of tlie talk about adverse trade balances and fears for' the future, .Mr. Savage said, was deliberate political propaganda aimed against the Government. “The Government is attacked because the trade balance is not larger,” the Prime -Minister said. “They tell us that imports are too high and that we must cut them down. My view of trade balances may be elementary, but I will try it on the Opposition. They apparently do not appreciate the fact that a country’s exports must be used to pay for its imports. "We owe a considerable amount of money abroad. Members of the Opposition should know that; they borrowed the money. Interest to-day on pulilic and local body debt due overseas amounts to about £6,250.000 sterling annually. That means that'if we are to pay our way we must at least have a favourable balance of exports to that extent. Experiences In Past. “It does not matter if once Jn a while this balance is not achieved.” Mr. Savage continued. "Over a .series of years Hie position must adjust itself Last year we did not quite strike Hie necessarv balance of £6.250.000 sterling. Actually the balance was about £5,500,000. sterling, but we had an accumulation of funds abroad sufficiently large to enable us to meet our demands.” . . The position last .vear was not seiious, the Prime Minister said. There was already ample evidence of a slackening off in imports, a position which had been predicted by the chairman ot the Bank of New Zealand in his annual report. However, Opposition members would probably be surprised to learn that during the 11 years between 1921 and 1931 there bad been adverse trade balances on six occasions. In 1921' the adverse'balance was £19.000,0.00, in W'-b it was £4,250,000. and in 1927 it was £2,500,000. • A Government voice: Who was I rime Minister then? "It was the Rt. Hon. member for Kaipara,” said Mr. Savage. “It was the man who got tilings done. He seems lo look annoyed.” The Rt. Hon. J. G. Coales_: You have interrupted a very interesting story I was reading. London Comment. » 'There had also been adverse balances in 1930 and 1931. Mr. Savage continued, and it was only when the previous Government entered on its depression policy of deflation and cessation of borrowing that there was an unbroken series of favourable balances. During the previous 11 years, 'Governments bad carried on bv borrowing abroad to the extent of £59.000.000. Under the Labour Government exports had exceeded imports in terms of sterling by just under £10.000.000 in 1936. and just over £10,000.000 in 1937. Over three years the country had more than paid its way and that posi tion had not been achieved at the expense of the poorer people. The "Financial News” in Loi’jjou had recently made the statement that the fall in New Zealand’s sterling balances was accounted for by increased imports, mainly of foreign motor-ears. An examination of the figures would disprove that argument. “During the depression,” said the Prime Minister, "this country practically ceased buying metals and machinery.' We were forced to live from hand to mouth and to go without capital goods. Their value dropped from nearly £10.000.000 in 1929 and £9,500,000 in 1930 to £4.000,000 in 1932 and £4.500.000 in 1933. In the first two years of Labour Government the value' of tlie same type of goods rose to £25.500.000 in Hie aggregate. Tlie leeway is being made up. Diversion From America. "And the British manufacturer did not do too badly out of it either,” tlie Prime Minister added. “He supplied about 00 per cent., or about £15.000,(MM) worth, of these capital goods.” As for tlie charge about foreign motor-ears. Mr. Savage continued, tlie figures showed that in 1937 motor vehicles imported were valued at £7,000.000. That was certainly a record figure, but of tlie total £3,900.000 was in respect of ears from Britain and £2.100.000 in respect of cars from oilier British countries. “So far as the United Kingdom i 5 concerned.” said tlie Prime Minister. ‘ its share of tlie import trade ini ll New Zealand lias increased very mate rially in tlie past six or seven years There lias been a considerable diversion from Hie United States to the United Kingdom, and purchases from Britain would increase still further i. British manufacturers could supply more of the goods which we need.