NEW ZEALAND FINANCES

Evening Star, Issue 23130, 2 December 1938, Page 9

NEW ZEALAND FINANCES

THE FLIGHT OF CAPITAL LABOUR PAPER'S COMMENT Press Association—By Telegraph—Copyright LONDON, December 1. The ‘ Daily Herald ’ (Labour), in recording an abatement of the New Zealand exchange flurry which provoked an increase in the discount rate, says that on the balance of payments a deficit of £7,000,000 to £8,000,000 is likely, but the London funds have fallen by nearly £12,000,000, the difference of £4,000,000 to £5,000,000 measuring the amount of capital exported during the year before the tion.The ‘ Daily Herald ’ suggests that if the Socialist experiment is being built firmly it is worth considering in advance measures that might be taken to meet a fall in the export surplus dr a flight of capital. If it becomes substantial the falling export surphis might be countered by higher tariffs on luxuries or by a suitable devaluation, which should not be regarded as a disaster but a natural economic adjustment. A real flight of capital could be met by a refusal to grant foreign exchange for that purpose. The ‘Daily Herald ’ "adds: “Meanwhile it is probably wise to moderate momentarily the expansionist policy, particularly in regard to public works loans from the Reserve Bank.”