UNWARRANTED TALK OF DEFAULT

Evening Post, Volume CXVI, Issue 22, 26 July 1933, Page 8

UNWARRANTED TALK OF DEFAULT

Though the Hon. A. D. McLeod is not a Minister of the Crown he has held high office, and from him is expected something more considered than the irresponsible talk of those farmers who stop at nothing in their opposition to quota proposals. It is surprising, therefore, to find Mr. McLeod reported as stating:

One thing was certain in all the arguments against a quota being imposed on, the entry, of New Zealand produce into Britain, and that was that, if the entry of our produce into Britain was not allowed we would have to default in debt payments to Britain.

So far from being a certain result, it is one which is most improbable unless the default is deliberate. This would make it repudiation and to repudiation Mr. McLeod declares his utter opposition. What are the facts? For the twelve months ended June 30, New Zealand had a trade credit balance of £12,180,000 in New

Zealand currency. This was more than sufficient to meet the cost of imports and the service of the -external debt, even though such costs for > five months were increased by high exchange. Even if a quota were to reduce the return for exports —and Mr. Coates, for one, does not hold this to be proved, since there would be compensation for reduced volume in higher prices—-there would still be a substantial trade balance. If this balance were insufficient to pay for imports and debts on the present scale, is it right that we should say at once that we would first practise economy by refusing to pay what we owe? It is reasonable to say as Mr. Downie Stewart said as Minister of Finance that "at the present level of prices New Zealand can either pay her London obligations or buy British manufactures, but she cannot do both, or rather the latter must be severely restricted." If buying power is reduced it is obvious that buying must be curtailed; but we must go much further before debt obligations can be dishonoured without repudiation.