IMPORTS, EXPORTS, STERLING

Evening Post, Volume CXII, Issue 89, 12 October 1931, Page 6

IMPORTS, EXPORTS, STERLING

It is figured out by Professor Copland that if sterljing settles for the time being at 15 per cent, below the dollar, Australia's exports will rise by the same 15 per cent. Last year her exports realised £78,000,000, and for the purposes of argument he assumes that her exports might realise this year £75,000,000 if Britain remained on the gold basis. But with Britain off the gold basis, and with sterling at a 15 per cent, discount, Australia's £75,000,000 of exports would rise to £86,000,000, an increase of £11,000,000. Now, against this there is a set-off, in the higher price to be paid by Australia for imports from countries still on the gold standard. If Australia's imports during the current year should drop to £45,000,000 (they were £60,000,000 last year) a higher price is now to be allowed for the gold standard (foreign) section of those imports; and Professor Copland therefore assumes that this section would not be more than £25,000,000. (That figure would be reducible as more and more, foreign countries fall off the gold standard.) He thus finds that, owing to the discount of sterling, not more than £25,000,000 of Australia's imports would rise by not more than £3,750,000. Subtracting a £3,750,000 rise in imports from a £11,000,000 rise in exports, the result is an advance in Australia's trade balance of £7,250,000, due to a l£ per cent, discount of sterling in^terms of the dollar. We have summarised Professor Copland's calculation as it expresses a principle applicable to New Zealand. Australia's estimated gain of £7,250,000 is subject to a further subtraction because of the increased cost of Australian Government interest payable in the United States. Fortunately, the New Zealand Government has no American interest to pay.