The Dominion. TUESDAY, SEPTEMBER 25, 1945. WHAT IS NEW ZEALAND'S POLICY?

Dominion, Volume 38, Issue 306, 25 September 1945, Page 6

The Dominion. TUESDAY, SEPTEMBER 25, 1945. WHAT IS NEW ZEALAND'S POLICY?

Faced with the necessity to conserve dollar exchange, in order to finance the purchase of essential supplies, the new Chancellor ot the Exchequer in the British Government has stated that we must cut down, without delay, all imports requiring dollar expenditme unless they are absolutely vital.” That decision must have far-reach-ing repercussions, and it would be foolish to think that this Dominion can in some way “contract out.” Could it reasonably be expected that a country, forced by economic circumstances to limit its do ar purchases to bare essentials, should make available all the dollar exchange which the Dominion might desire? We certainly have the necessary funds in London, provided, for the greater pait, by the purchase of our products by the British Government, plus very substantial gifts to improve our sterling position, but they could not, in equity and fair dealing, be used in such a way as needlessly to increase the strain on dollar exchange. The position here is more than a little disturbing. Not long ago the Government placed very substantial orders in the United States, involving in the aggregate several millions of dollars. The chief item was for plant for hydro-electric installations, but the trend of Government purchases was clearly shown in the Public Works Statement recently presented to Parliament. The Minister there _ stated, that he had “arranged for the Chief Mechanical Engineer to visit America in order to arrange purchase of mechanical equipment.” Jn the following paragraph, dealing with river control, he said that “special excavating machinery has been secured from the United States, and a few lines further on he records the fact that “two special-type tower excavators of the largest capacity so far produced in the United States of America have therefore been obtained.” Recently there were landed two large shovels, for use by the Mines Department, each costing £30,000, but its report must be awaited before it can be ascertained from what country they were purchased. It is obvious that the Dominion cannot, in justice to the people of the United Kingdom, faced with the necessity of restricting their own purchases to vital requirements, expect that exchange should be made available for just whatever this Government wishes to obtain outside the sterling area. To make such a request would be sheer ingratitude, for the sterling reserves themselves would have been far below existing levels had it not been for the purchases and puces paid by the British Government for New Zealand produce and rawmaterials. To suggest that the funds which British purchases had made available should be used to increase the dram on dollar exchange at such a time as this would be unthinkable. That does not oveistate the position, because it must be kept in mind that the. seveic restrictions placed imports to this country —and which this Government intends to retain as a permanent item of policy—-assisted to maintain our sterling holdings at a good.level. . The issue can be stated briefly. In Britain they must himt^purchases involving the use of dollars to what is absolutely vital. .In New Zealand the Government has placed large orders in the United States for the purchase of capital equipment involving dollar exchange. Is it too late to have these contracts revised or even cancelled ? That course might involve some financial loss, but if it eased the di am on Britain’s dollar funds that would provide ample justification. In any case the Minister of Finance should give Parliament and people, some official indication of how the Government views the position, in. the light of recent developments, what effects it anticipates these things will have on the economy of the Dominion, and what steps it is proposed to take in order that everything possible shall be done to assist the Mother Country. Something more than a gesture is ca led for, and whatever practical steps may be under consideration they would have added value if they were taken now.