TRADE IMPROVED

Evening Post, Issue 20, 23 July 1935, Page 9

TRADE IMPROVED

BUT A LONG WAY TO GO BANKER'S PROPOSAL •' A BUSINESS COMMITTEE (Special to the "Evor.L.g Post.") ■■ . DUNEDIN, This Day. ' "I am sure you will agree with me that business in New Zealand has improved to a more normal and healthy condition than that which characterised it during the deep depression years of 1931 and 1932." In. these terms, Sir James Grose, general manager of the National Bank of New Zealand, opened his address at the Dunedin Chamber of Commerce dinner last night. He reviewed the disappointing wool season just closed, but remarked on the cheering tendency of the wool market at the latest sales. Prices for dairy produce had ruled at low levels throughout the year, but there had been an appreciable improvement in the butter market re- . cently, although the cheese market remains dull. As to the meat export trade, it was indeed gratifying to ■ learn during the past week of the very satfsfactory agreement reached in London. Although this arrange- . ment is but temporary, yet prospects for a favourable long-term agreement now appear very much brighter. "Of all this you are fully aware," Sir James continued, "but I have purposely commented on, the Dominion's primary products before mentioning its manufacturing industries, wholesale and retail trades. Statistics .regarding the Dominion's external trade - . are freely published month by month, but it is more difficult to obtain a . ready line on the volume of business internally. However, a study of the banking returns, ,sales tax returns, and unemployment figures reveals that a definite increase in internal business activity has occurred during the past two years. "Nevertheless, the large number of men who remain a charge upon the Unemployment Fund provide a painful reminder that we have still a long way to go before a full measure of prosperity is attained, arid I am sure that as citizens of Dunedin and as business men your most earnest hope is that the near future will witness such , further improvement in trading conditions, as will ensure the complete absorption of your unemployed fellow citizens into productive occupations. THE PROSPERITY PROBLEM. "The problem which faces us is to find by what means prosperity is to be obtained," Sir James remarked. "This problem is not a new one, and it is not one peculiar to New Zealand. If our ■ country happened to be a self-contained unit, without need for external trade, : the problem would be very much . simplified. But the economic structure of this Dominion has been built upon ■ the basis of production for export'and, ; to a large extent, importation for con- , sumption, with heavy overseas bor- ' 1 rowings for development purposes. ( There are those who would have us believe that recovery of business pros- ■ perity can be accomplished without regard to conditions in our overseas -■markets; but to a very large. extent recovery in New Zealand is; dependent' upon recovery in the chief markets of . the world." ■He did not suggest that New Zealanders should simply accept the present situation and await develop- ' ments overseas. He firmly believed that much can be accomplished .in- : . ternally, and for that matter he believed that much had been so accomplished. . • i "The major problems are not local J in character," he showed.. "They are I national and international, and there- i fore the duty of dealing with these 1 problems has devolved largely upon I the Government of the day. Our '• politicians are therefore called upon i to deal with' problems which touch J at the very roots of the business and i . social life of the Dominion, and I 1 ■■ firmly. believe it is the duty of the '■ business men of this Dominion to < study fully every subject which affects ] the welfare and prosperity of the coun- ] try and to give the benefit of their J studies and experience to the poli- J ticians of the day. A CONSULTATIVE COMMITTEE. "In making this statement I do not '■ intend to belittle the ability of our i politicians to deal with the questions 1 which arise, but I do say that a more < frank and full discussion of current < problems and legislative proposals : would redound to the ultimate bene- < fit of the Dominion as a whole. I 1 believe that a small committee of, say, < five leading men, well representative^ j of business generally, with whom the ] authorities could consult, would be 1 of advantage to the Dominion. I am 1 aware that the chambers of commerce 1 are not organised to secure petty busi- i ness advantages for individuals. This 1 implies a broad outlook and ability to s see the other man's point of vieAV, and the aim of every responsible body of citizens in these uncertain times a should be the maximum benefit for the 1 : maximum number. This aim may ape pear rather altruistic, but 'its attain- \ ment would result in that fuller mea- < sure of prosperity which we are all c seeking. _ i "If the world depression is to be ; overcome, a fuller and freer develop- i ment of international trade is esseri- % tial and this requires the nations of -\ the world to jettison that policy which c has been so generally adopted in re- t cent years—economic nationalism. The desire to protect an industry is read- \ ily understandable but that) protec- < tion almost invariably creates an arti- s ficial state of affairs and directly af- c fects the interests of another nation s which in turn takes steps to protect \ ■ itself. The. result' is repercussions in t other countries, and so the 'vicious 1 circle' is commenced. Embargoes, 1 quotas, levies, tariff increases, and 1 subsidies are some of the methods by i which nations have sought to protect 1 themselves, and the net result- has 1 been stagnation in international trade, i ECONOMIC NATIONALISM. j "The wonderful progress made by j New Zealand during the past fifty ; years has been achieved largely j through free entry of her produce to i British markets. " Britain has not escaped this malady of 'economic na- ; tionalism' and the threatened restric- 1 ' tions on the free entry of products ; which this Dominion has so long en- 1 joyed are a direct result of this dis- i astrous policy of self-sufficiency. When i international trade was comparatively : free and unfettered the world was more prosperous than it i 3 now and | " I have no hesitation in saying that ■ 1 free and extensive international com- : petition, with each nation selling to • others that which it is best able to ■ produce, is more likely to result in world prosperity than is perseverance i with the policy of self-sufficiency, : ■which involves State interference in : business and the repression of healthy business enterprise. "Although criticisms of this trend towards economic nationalism have been widespread for quite a period of time, up to the present very little : has been accomplished in the direc- j tion of getting out of the difficulties :

created by this 'vicious circle' to which I have referred, the difficulty being that although eventual benefits appear certain if general abandonment of j the policy is secured, any one nation taking the preliminary step would seem certain to bring on themselves at least a temporary • disadvantage. Nevertheless among certain nations we find fresh trade agreements being entered into, which involve at least some modification of the policy of complete self-sufficiency, and it seems probable that further progress towards recovery of international trade is likely to be effected along these lines. ..'-■■ UNSTABLE CURRENCIES. *• "Turning from this aspect of the present position, I would mention brjefly another line of thought which has been given much prominence in recent months. I refer to the problem of currency stabilisation. Within recent years we in New Zealand have had experience of wide fluctuation in the lvalue of our own currency in terms of sterling and other currencies,l and you as business men have a full appreciation of the confusion and uncertainty resulting from shifting currency values. I feel you will forgive me, however, if I quote an extract from a report which recently came to my notice, emphasising the necessity for stability in international exchanges:—l 'Of all disturbing changes, widely fluctuating currencies are perhaps the worst because they affect not merely payments . . . but prospects, for no amount ofv ingenuity will make clear which prospects are reasonably assured, at a time when constant changes are going on. If currencies were stable in terms of each other' or if—to take another alternative—they vai'ied exactly in proportion to real changes going on within countries, the position would be a known one. When this does not happen a slowing down of trade is the inevitable result.' "The period of this depression has vHnessed the competitive depreciation c* currencies, with temporary and sometimes illusory benefits to one country being quickly wiped out by a similar action in another country, until a stage has been reached where confidence in currency units has been largely lost. It is therefore cheering to note the prominence which is now being given to the problem of currency stabilisation \and I believe that this is one direction in which substantial progress will yet be made in solving the immense problem of lost prosperity. I have an appreciation of the difficulties to be overcome in reaching an international agreement •on any matter, and am therefore not prepared to hazard a guess as to the basis upon which leading nations of the world would be prepared to discuss an international currency agreement, but-1 think the nations are coming to a realisation of the benefits likely to accrue from such agreement and therefore there is justification for more than a little hope in this direction. "I have spoken at some length regarding matters which may appear to be the. concern of the Motherland rather than New Zealand, but I feel that the solution of our difficulties will be very closely linked with the fixture trade and monetary policy of j Great Britain and that therefore one must, to some extent at least, view matters from an international standpoin," Sir James also referred to legislative measures taken to relieve the primary producer and to adverse criticism of the banks operating in New Zealand. His remarks on these subjects are reported elsewhere in this issue. ':