THE HARD FACT

Dominion, Volume 34, Issue 110, 3 February 1941, Page 6

THE HARD FACT

Reports in the Dunedin newspapers of the speech delivered by the Minister of Finance last week give some interesting particulars that were omitted from the telegraphed condensation. Mi. Nash told his hearers that 1938 was a critical year because an attack had been made on the finance of the country in order to disciedit . ie Government. Funds amounting to from £10,000,000 to £15,000,000, he alleged, were taken out of the Dominion by people living heie, an invested overseas, and that, the Minister went on to say, yas largely instrumental in reducing the sterling balances, thus making it necessary to introduce exchange control and the licensing of the import tiade. It is difficult to reconcile this statement with the views he hnnselt expressed in 1938. Speaking in Parliament in August. 1938, the Minister gave this explanation of the withdrawal of capital. There were large companies (he said) operating in this Dominion during tlie depression years when the exchange was put up that decided to keep their money here, and then wliefl the Prime Minister said that the exchange was likely to be altered they brought more money here, but now they are taking some of it awaj. It was also contended that heavy imports had affected the position. But it was not until after the general election of that year that exchange control and import restrictions were imposed. The hard fact is that, at a time when capital was being attracted to Australia, because the policy being followed there was leading to industrial development, this Dominion was spending more than its income and using up its capital reserves, a fact belatedly admitted by the Minister. The position has been stated clearly in Professor Hancock’s book on Dominion policies: This draining away of resources occurred in a period when the prices paid for New Zealand’s chief exports could not be called uufavourable, and were certainly better than the average prices realized by Australia’s exports. In 1938-39 it reached a point where the Dominion’s solvency came under menace. As a result the Government had to face some of tlie contradictious which were contained in its own policy. That is the position exactly. It was the logical outcome of the policy adopted. As the authority quoted put it: “It was the uudesired and -unforeseen consequences of New Zealand policy, not the triumphant fulfilment of a plan, which led to this result.”