OUR OVERSEAS CREDIT

Evening Post, Volume CXXXI, Issue 97, 26 April 1941, Page 8

OUR OVERSEAS CREDIT

In a statement'published today the Minister of Finance quotes from "The Times" annual financial and

commercial review cofnmenting upon tj^e improvement in New Zealand's financial and sterling position. "The Times" review points out that "since the war began New Zealand has been sending to this country large shipments of commodities which we badly need, and .she has thereby been able to effect a vast improvement in her own financial position," The favourable trade balance for the production year to June 30. 1940. was some £18,000,000 (New Zealand) higher than for the previous year. A result of this improvement is a large increase in net overseas assets. It is pointed out, however, that "it must not be assumed that all New Zealand's financial troubles are ove/ and that she can now safely proceed to squander the reserves which have been carefully built up by the policy of exchange control." One contingency for which preparation must he made, for example, is reversion after tl*e war to the old methods of financing exports, with a consequent time-lag in which New Zealand sterling balances will be .seriously depleted. Another contingency, not mentioned because it was not so clearly apparent when "The Times" article appeared on February 18, is the restriction of exports. As it was war bulk sales that provided the basis for bigger trade balances (exchange control was only the method used in conserving the balances) so reduction of sales will moan reduction of the trade balance. Tn assessing ihc importance of the factors thai have contributed to sterling recovery we should place the positive forces — high production and British buying —before the negative factors—import restrictions and exchange control.

Continuance of import restrictions is held by "The Times" to he desirable in' New Zealand's own interests and equally in the interests of the Empire's war effort. Mr. Nash quotes the reference on this point as proof that New Zealand is not acting against Britain's interest in "keeping down imports. This is so if the full implications of the United Kingdom Government's, statement are accepted. But it should be noted that this is advised as a war emergency measure. It is no argument for restriction when Britain can resume peaceful production. Nor does it apply to the period, pre-war and early war. when Britain still had productive power for export trade. There is a further implication mentioned in "The Times" —the United Kingdom Government asked that the restriction of non-essential imports from Britain should -be accompanied by equivalent economies in New Zealand's consumption. , Economies in consumption of imported goods are being forced upon the people of New Zealand, "The Times" states, by the import restrictions and by the difficulty of obtaining supplies from the United Kingdom. It is important, however, that demand for goods which cannot be imported should not be deflected tn the home market. If this should occur instead of the required drop in consumption, the result will be an inflationary increase 'n pnees. Fortunately it does seem to be generally recognised that this is undesirable. hi brief, we musl lie prepared for a -pdnotion in that part of our living standard to which imports contribute, ff we insist lhat (he standard shall pioi fall, thai home manufacture shall '•><•» huilt up to supply the import deHriency. and labour, finance, and ■material? devoted to lhat end. then we do nn| accept the full implication of the British request. We accept :mpor! restrictions, but not restricted •onsiimption. Tt is this personal sne•ificp thai is the essential and lolling '■•u'tor in the slrugsfle. It involves •■onrenfration, of all effort on war--without diversion of energy to normal Mpaee aims. "There are too many cases of strained nerves and complete breakdowns in this country.' said Mrs. Knox Gilmer in the course of her candidature for re-election to the Hospital Board. "In pite of our salubrious climate. the general average of physical well-being in the community is not high, and it is time we thought out methods of prevention of physical and nervous trouble. I advocate the establishment of holiday homes, which have proved successful in New South Wales, where women have a spell from the daily round, and where incipient, illness and collapse can be warded off in an* atmosphere that is congenial and free from responsibility."