AFTER THE WAR

Evening Post, Volume CXXXVII, Issue 123, 26 May 1944, Page 5

AFTER THE WAR

ECONOMIC OUTLOOK

NEW ZEALAND'S FUTURE

A warning: that the only way toj ensure prosperity was to work for iti was given in an address to the Wei-; lington Optimists' Club yesterday byi Mr. Leslie Lefeaux, former Governor, of the Reserve Bank, who said that work should not be looked on as a necessary evil, but as a useful task delighted in. He reminded his listeners of Mr. Winston Churchill's advice to beware of a society in which enterprise gained no reward and thrift no privileges. . Mr. Lefeaux said that many import-; ant factors at present unknown might] bear on the future of the Dominion] after the war, but whatever ' the' answers, consideration of the past and! present might help in reaching af proper attitude and estimate of the' future. He said that if anything approaching, the economic storm of the late '20's' and early '30's should be encountered in the future it would be necessary,! as in the past, to shorten sail, for to attempt to run on under full sail! would be inviting trouble. No amount) of monetary manipulation could en-j sure prosperity in such conditions;] the utmost that could be done by that] means would be to spread the burden? differently. In 100 years human elements added!/ to natural advantages had caused r&4 markable progress in New Zealand? and a- healthy body had been built up.j Another factor which had been of; great benefit to the Dominion had! been the capital provided from over-! seas. "In a young country ability to; attract outside capital in case of need} is a valuable asset, and I sincerely^ trust nothing will be done here to undermine the confidence on which it. depends," said Mr. Lefeaux. , "Suchi capital naturally looks for three mainl things: a reasonable annual return,, stability of exchange values, andabove all freedom of movement. Ifthose requirements ate denied, a country is thrown back on its ownresources and must save to provideall its capital needs." Without wishing to disparage past, achievements, it was impossible toescape the conclusion that New Zea-: land had been decidedly fortunate inJ many respects, because of a combina--' tion of favourable circumstances, con-{ tinued Mr. Lefeaux. Not only had,! successive wars failed to lead to the' violation of its shores, but they had! actually produced periods of abnormal? prosperity. Much as it was withJ armament firms, war produced abnor-? mal demands for primary produce,1 and thanks to the Royal Navy and* now to its American allies, New Zealand's principal customer had been' able to continue to acquire the bulk' of its produce, for which more than* average peacetime prices had been obtained. That favourable position hadactually been accentuated by the misfortunes of some of the Dominion's principal competitors. ; CONTRAST WITH BRITAIN. In contrast, material damage in Bri--tam amounted to well over £10,000,000,000, and. its export trade^ had been cut to ribbons. New -Zea-i land s assets overseas had actually in-> creased by £30,000,000 after making1 some debt repayments, while Britain1 had spent £1,500,000,000, practically1 the whole of her overseas assets, inthe common cause.; Then there was: the balance of about £24,000,000 owing! by New Zealand to Britain in respect! oi the last war, on which instalments" of principal and interest had been sus-1 pended for many years and might possibly never be resumed. Again, there' were the enormous imports under! lease-lend and similar arrangements' which,were now being received without payment, at least for the time being, raising the total of imports for; Tm &fn annn° the stu Pendo^ figure ofi £95,750,000, an easy record for all' times. Exactly what was the full significance of these last-mentioned: figures they were not told, but someone somewhere' had to save and pay for what was provided without charge' to this country. The speaker said he did not wish toi make invidious comparisons or belittld New Zealand's war effort, but to help discover the extent to which the* country s achievements and position? could serve as a reliable guide for others and the extent to which they' could be relied on as a guide for her own future. If New Zealand had notl borne, in peace as in war, her proportionate share of the cost of Empire defence and other similar costs of a' completely sovereign State, it certainly; had a bearing on the question of- . whether other countries, more selfsupporting, could hope to-afford such lavish monetary benefits as had been provided by the State in this Dominion. DEPENDENCE ON EXPORTS. Till development reached a far more advanced stage the Dominion's prosperity must depend in the main on the amount received for exports. So long as overseas customers had freedom of choice as-to what they would buy andwhat they would give in exchange,' their decisions must have an import-; ant effect on the prosperity of any; country living largely by its exports. He did not believe that the leanness! of the depression years and the prosperity of the period just before and* during this war were due to the respective Governments which had hap-4 pened to be in power at those times.! "When this country was hard press-i ed others were more so," said Mr.| Lefeaux. "Borrowing or obtainingl goods on credit would be well nigh< impossible in such circumstances. Failing any such external assistance the| only alternative was to go on short commons during, or immediately following, the lean export years. I include the year following because the natural tendency is to spend in one! year the proceeds of the previous season's exports. This necessity could' only be obviated by underspending; during relatively good export years and building up a reserve fund over-j seas to augment the amount available for importing when export returns are small. "Any suggestion that the hard course I have indicated could be avoided if similar lean export years are to be experienced in the future is, in my opinion, not only misleading but highly, dangerous, and I would counsel youj not to be tempted to believe that any; form of domestic administration could' make the path smooth and easy in such circumstances." Denying all political motive in saying >this, Mr. Lefeaux said that, for all' he knew, the administration might' have been very bad.in New Zealand* during the lean years, and it might, have been possible to ■. mitigate the severity of the blow for those least1 able to stand up against it, but it was' usually easier to look back when calm, seas had been reached and say what! should have been done to weather the storm better. A prosperous nation provided tha, best hone of a good standard of living) for all "its people, for such prosperity tended in time to spread over the whole, but that prosperity had first to be won. Difficulties could not be overcome by attempting- to lend oneself money, and international conferences, could not, of themselves, ensure prosperity. It remained with those actually; engaged in production and industry, whether as employers or employees, to achieve success by their skill and1 efforts. ' '.' i