IMPORTS AND STERLING EXCHANGE

Evening Post, Volume CXXVI, Issue 151, 23 December 1938, Page 8

IMPORTS AND STERLING EXCHANGE

(To the Editor.)

Sir,—There appears to be a good deal of confusion, both here and in London, respecting imports into New Zealand. References to the subject in London indicate that the view is held that imports are mainly, if not entirely, responsible for the depletion of London funds. A good many people in the Dominion appear to hold the same opinions, and they are all astray, as can be proved by the official figures. Let me begin by pointing out the position in the slump years of 1931, 1932, and 1933; I am dealing with the production years ended June 30. The figures are as under:— : Year to Exports. Imports. June 30. ■ & & 1931 36,943,000 35,373,000 1933 ...34,660,000 24,655,000 1933 ' 37,471,000 25,290,000 £109.074,000 £85,318,000 The exports exceeded the imports in taose slump years by nearly £24.000,000. In 1931, the margin was. very narrow and that was due to the fact that there is always a time lag with imports. In 1932 there was a sharp decrease of nearly £11,000,000. Now for the boom years of 1936, 1937, and 1938. The figures are as under: — Year to Exports. Imports. June 30- £ £ 193fi 53,669,000 39,460,000 1937 64,621,000 56,076,000 1038 61,920,000 57,342,000 £180.201,000 £152.878,000 In the three boom years the exports have exceeded the imports by £28,123,000? The time lag will again be noted in the imports. The imports in 1936 were not commensurate with the exports, but in the following year the imports rose by nearly £17,000,000. On these figures it cannot be claimed that imports have been the main cause of the depletion of sterling funds. Importers have the advantage of being protected by six watchful policemen, that is, the six trading banks, who will not let them go astray. But now let me bring the figures up to date. They are as under; — Exports. Imports. l£i •::::::::: BSS 88S S5-■„:::::: BBS igS ' £12,955,000 £18,764,000 Here we have the imports exceeding the exports by £16,000,000. Between August 29 and December 12, the sterling funds of the Reserve Bank fell from £13,695,000 to £4,572,000 the loss being a little over £9,000,000. Here again the time lag in imports is to be noted. In September there was a decrease of £200,000 compared with August, when the bulk of the goods for spring and summer come to hand. As a matter of fact compared with last year, imports have been fading rapidly since May, "as will be seen by the table appended:— , 1937. . 1938. May*" .. I - ■■I,- ■ - 4,441,000 4,184,000 Skw .-.. 3,961,000 3,583,000 July 1.....*..*.- 4,843,000 4,611,000 August 6,008,000 5.063,000 September 5,403,000 4,821.000 October ......... 4,624,000 4,270,000 £29,280,000 £26,532,000 In the six months imports have contracted by £2,748,000, and succeeding months will show further contraction. There is ample evidence to show that there has been no solid reason for the Government seeking to restrict imports, for importers are taking the necessary steps in that direction. As the bulk of our imports come in from the United Kingdom, the prevention "of the importation of a single line 'of merchandise from the United Kingdom would be, in my opinion, a breach of the Ottawa Agreement in which it is laid dqwn that the New Zealand- Government will fix its tariff "at such a level as will place the United Kingdom producer in the position of a domestic competitor." To restrict imports from the United Kingdom would be to deny the British exporter his rights—agreed rights under the Ottawa Pact . ' ■ The run on sterling exchange appears to be largely due to the flight of capital, and that flight has been caused by a lack of confidence! in our immediate economic future, and to fear of Government interference. Our exports, which provide us with our main income, are falling, while costs and taxation continue to rise. Perhaps 'your readers are not aware that this movement appears to have extended to the Post Office Savings Bank. In the Monthly Abstract for November there appears the following table:— SEVEN MONTHS TO END OF OCTOBER. , 1938. 1937. £ £ Deposits 18,967,355 19,621,818 Withdrawals 19.841,318 17.138,578 £873,963 £2,183,240 While in the seven months to the end of October last year the deposits exceeded the withdrawals by the substantial sum of £2,183,240, for the same period this year the withdrawals exceed the deposits by £873,963. This is not a very flattering tribute to Labour administration. The Government is now faced with the problem of reducing costs. It is inescapable, and so long as it is shirked the greater will be the troubles for the country. Our internal economics are unbalanced, and it is futile to believe. that industry can expand under present conditions. And in my view so long as the unbalanced position exists every </ onomic gesture of the Government will engender other and more serious economic problems.—l am, etc., H.J.K.